Teva First-Quarter Profit Slides on Provigil, Generics

“Teva Pharmaceutical Industries Ltd. (TEVA)’s first-quarter profit fell 26 percent as a branded drug lost patent protection and opportunities diminished to introduce new generic medicines.

Earnings excluding some costs declined to $960 million, or $1.12 a share, from $1.3 billion, or $1.47, a year earlier, the Petach Tikva, Israel-based company said in a statement today. Profit beat the average estimate of $1.11 a share from 20 analysts surveyed by Bloomberg.

Teva’s branded-drug sales dropped as Provigil, a sleep- disorder medicine it got in the $6.5 billion acquisition of Cephalon Inc. in 2011, lost patent protection last year. Sales of generics were higher in last year’s first quarter as Teva began selling seven new products and benefited from a partnership with Ranbaxy Laboratories Ltd. for copies of Pfizer Inc.’s Lipitor.

Revenue from Copaxone, the branded multiple-sclerosis treatment that is Teva’s best-selling product, increased 17 percent in the quarter to $1.1 billion as Teva boosted the price of the injection. Copaxone faces new competition from Biogen Idec Inc.’s Tecfidera, which grabbed an 8 percent share of the MS pill market in the week ended April 19, according to Bloomberg Industries.

Feedback from doctors suggests some Tecfidera patients are switching from Copaxone, according to Marko Kozul, an analyst with Leerink Swann & Co.

Levin’s Forecast…”

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“WASHINGTON (AP) — The U.S. trade deficit narrowed for a second month in March as the daily flow of imported crude oil dropped to the lowest level in 17 years. The deficit with China hit a three-year low.

The Commerce Department says the trade deficit decreased to $38.8 billion, an 11 percent drop from February’s $43.6 billion….”

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“ING U.S. Inc. (VOYA), the New York-based unit of the largest Dutch financial-services company, raised $1.27 billion in its initial public offering, pricing an increased number of shares below the marketed range.

ING U.S. sold 65.2 million shares for $19.50 each, according to a statement yesterday, after offering 64.1 million shares for $21 to $24 apiece. ING U.S. will be renamed Voya Financial after the IPO and the switch will take about two years, the company has said. The stock will start trading today, listed on the New York Stock Exchange under the symbol VOYA….”

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“General Motors Co. (GM), after losing more than $18 billion in Europe since 1999, narrowed its first- quarter loss in the region, outpacing Ford Motor Co. (F) and helping the automaker beat analysts’ earnings estimates.

GM’s European adjusted loss before interest and taxes was $175 million, compared with $294 million a year earlier, as the region’s economic slump continued to roil sales, according to a statement today from the Detroit-based automaker. Companywide profit excluding one-time items was 67 cents a share, exceeding the 54-cent average of 16 estimates compiled by Bloomberg…”

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“Euro-area manufacturing output contracted for a 21st straight month in April, adding to pressure on the European Central Bank to cut interest rates to spur lending and growth.

A gauge of manufacturing in the 17-nation euro area declined to 46.7 last month from 46.8 in March, London-based Markit Economics said today. That’s above an initial estimate of 46.5 on April 23. A reading below 50 indicates contraction.

With the euro-area economy mired in a recession, the ECB’s Governing Council will cut its benchmark rate today to a record low 0.5 percent from 0.75 percent, according to the median of 70 economists’ estimates in a Bloomberg News survey. The Frankfurt- based central bank sees the economy shrinking 0.5 percent in 2013.

“There is nothing here to suggest that manufacturing will turn the corner and stabilize any time soon, putting greater onus on policy makers to act quickly to reinvigorate growth,” Chris Williamson, chief economist at Markit, said in today’s report.

The euro pared losses against the dollar after the data were released, trading at $1.3172 at 10:41 a.m. in Brussels, down less than 0.1 percent on the day.

Record Unemployment…”

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“China’s yuan advanced to a 19-year high after the central bank raised the currency’s reference rate by the most in more than six months amid speculation U.S. monetary stimulus will spur faster gains. Volatility surged.

The yuan strengthened 0.15 percent to close at 6.1560 per dollar from April 26 in Shanghai as markets reopened after a three-day holiday, according to the China Foreign Exchange Trade System. The People’s Bank of China set the fixing 0.2 percent stronger, the most since Oct. 15, at 6.2082 per dollar….”

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“HEADS UP: The world’s biggest economies are releasing their April manufacturing PMI reports. And this is our scorecard.

So far, the reports reflect a global deceleration.

China’s official manufacturing PMI report slipped to 50.6 from 50.9 in March.  China’s unofficial HSBC PMI fell to 50.4 from 51.6.

In the U.S., the ISM and PMI manufacturing reports each fell.

However, the Chinese and U.S. numbers all remain above 50.0, which indicates expansion.

In Europe, Spain, Italy, France and Greece all posted modest increases in their PMIs.  However, they are all in contractionary territory.

The big story out of Europe is certainly Germany, whose PMI tumbled sharply into contractionary territory.

PMI…”

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“The euro strengthened for a fifth day against the dollar as the European Central Bank cut its benchmark interest rate to a record 0.5 percent in line with economists’ forecasts.

The 17-nation currency gained for a fourth day versus the yen even after a euro-area report showed the manufacturing industry shrank last month. ECB President Mario Draghi will hold a press conference at 2:30 p.m. in Bratislava, Slovakia, where the policy meeting was held. Sweden’s krona weakened against all except two of its 16 major counterparts as manufacturing in the nation unexpectedly contracted….”

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The ECB cuts rates for lending, refinancing, while keeping deposit rates at zero.

European markets had no interest and have sold off since the decision.

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World Markets

Currencies

Commodities

USD Libor

Euribor

Yields for Italy, Spain, France,  and Germany …

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“With the Fed now openly warning that there may actually come a time when the ‘flow’ stops; the most recent Treasury Borrowing Advisory Committee (TBAC) report has some concerning statistics for those change-ridden hopers who see a smooth Fed exit, deficit-reduction, and blue skies ahead.  While they are careful not shout ‘sell’ in a crowded bond market; hidden deep in the 126 page presentation are two charts that bear significant attention. The first shows what TBAC expects (given the market’s expectations) to happen to interest rates in the US as the Fed ‘exits’ its QE program (taper, unwind, hold) – the result, the weighted-average cost of financing for the US government will almost triple from around 1.6% to around 4.3% over the next ten years. But more problematic is that even with CBO’s rather conservative estimates of the growth in US debt over the next decade the USD cost of financing will explode from around $205bn (based on TBAC data) to over $855bn. Still convinced the Fed can exit smoothly?

As TBAC warns…”

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“People have called me a “perma-bull” forever. Mish Shedlock called me a “wacko”. Zerohedge has called me insane. Nouriel Roubini has laughed in my face. My daughters still quote Don Luskin when he was on CNBC shaking his head and saying, “James, James, James…” while laughing after I said the market was going to hit new highs.

Well, the market has hit new highs. That’s ok for those guys. I’m sure they all do well on their newsletters. I have no newsletter. I only invest with my own money. I live and die in the markets and I don’t depend on anyone else.

Is there a reason to change my mind? Not really. Eventually, the market will be higher than it is now.

But for the first time in a long time, I’m not a super bull on the overall market (although I like certain smaller stocks, see below).

The overall market (let’s say, the S&P 500) price is a function of supply and demand. I know people know this from Economics 101 and they view this as a micro-economic principle but it’s also macro-economic. it’s not only the price of Oranges determined by supply and demand, the aggregated price of every company in the world is also determined by this.

So what is “Supply” in terms of the stock market? Answer: it’s the total number of shares outstanding.

What is “Demand”? It’s the appetite to buy shares.

Supply is going down. This is both a good thing and a bad thing.

The good: Companies have enormous profit margins and are using their excess cash to buy back shares. This, of course, reduces shares outstanding. When companies with $100 billion in cash like Apple buy back shares, this reduces supply for the big mutual funds, etc.

Also good: When supply goes down, price goes up. This is why the stock market right now is at all time highs.

But then there is the BAD: I am seeing first hand within the private companies that I am invested in: nobody wants to go public. How come? Private markets are valuing companies higher than the public is.

Thats really funny: the PUBLIC is actually smarter than the supposed smart money. Look at Facebook (FB), Groupon, and Zynga (ZNGA) for examples.

And even the companies that want to go public: it’s pretty damn hard. I can’t quote you statistics. I only see this because I’m getting all the calls from brokers. If a broker is calling me to dump their little shitty IPO it means they can’t get institutions in.

How come?

Demand: Everyone is still pretty nervous.

Someone asked me the other day: when will this recession be over?

Guess what? It’s been over for four years.

But people don’t seem to know that?

How come? Because they feel like shit. Because people are getting jobs less than what their skillset suggests they should get. Because people are taking jobs for pay that doesn’t match what they would’ve gotten ten years ago. Underemployment, as this is called, is supposedly around 20% but my guess is it’s more like 30-40%.

Things feel like they suck.

Nobody feels like the stock market is back. Or that housing is starting to creep up. Or that America is starting to insource manufacturing again because globalization has crept up prices  worldwide.

People look at their crappy jobs and salaries and say, “I don’t feel so good”. And so they get a scarcity mentality and don’t want to buy shares.

I don’t blame them.

Meanwhile, supply is going to flatten out. There’s only so much stock that people can buy.

So Demand will probably remain the same, but now Supply will stop going down.

What happens then? Stocks go down. Or struggle to stay afloat.

My solution: I am buying smaller stocks where I am not competing for information against massive hedge funds and mutual funds that do everything they can to cheat the system (insider trading, manipulative trading, high frequency trading, special access to secondaries, etc).

I also invest in long-term demographic trends that I believe in. These companies will do well regardless of the overall stock market. It’s why microcaps always outperform large caps in the long run.

So I’m invested in…”

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“Dis-aggregationof credit is the understanding that there are good forms of credit and bad forms of credit.  A good form of credit is something like a standard business loan in which a company obtains access to a line of credit in order to make investments in the firm.  It pays employees, invests in equipment, etc.  This form of credit, when issued prudently, is usually productive in that it helps the company expand and it rewards the lender for having taken the risk.

As a credit based money system we rely largely on the health of these sorts of loans to keep the system running smoothly.  But there are also bad forms of credit.  For instance, when a homeowner decides they want to speculate on real estate as an investment because they (incorrectly) believe real estate can outpace inflation over the long-term.  We could make this matter even worse by repackaging the original loan and selling it off to new investors as AAA rated securities.  In other words, disaggregation of credit was a core piece of the 2008 crisis.

I think another sign of disaggregation of credit is the extraordinary growth in borrowing that occurs around stock market booms.  As the market surges we inevitably see a sort of ponzi effect in the market where more confidence breeds more credit and the bidding up of prices.  It works until it doesn’t and when it doesn’t the air sure comes out fast.

So it’s rather alarming to see NYSE margin debt just shy of its all-time high….”

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“Pope Francis on Wednesday condemned as “slave labour” the conditions for hundreds of workers killed in a factory collapse in Bangladesh and urged political leaders to fight unemployment in a sweeping critique of “selfish profit”.

The pope said he had been particularly struck by a headline saying workers at the factory near Dhaka were being paid just 38 euros ($50) a month.

“This is called slave labour!” the pope was quoted by Vatican radio as saying in his homily at a private mass in his residence to mark May Day.

More than 400 workers have been confirmed dead and scores are missing in the collapse, which occurred in a suburb of the capital Dhaka last week in the country’s worst-ever industrial disaster.

“Today in the world this slavery is being committed against something beautiful that God has given us — the capacity to create, to work, to have dignity,” the pope said at the mass.

“How many brothers and sisters find themselves in this situation!” he said, as protesters in May Day demonstrations around the world rallied against unfair work conditions and unemployment.

“Not paying fairly, not giving a job because you are only looking at balance sheets, only looking at how to make a profit. That goes against God!” the pope said in his strongly-worded address.

The Argentine pope, formerly the archbishop of Buenos Aires Jorge Bergoglio, became a powerful voice on the side of the poor during his homeland’s devastating economic crisis….”

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Many great things are developing in the nano technology world. Here is a bit of fun with atoms….

Go to movie 

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Inflation is well anchored,

Purchase expected to be continued until outlook for labor market has improved substantially,

The Fed will change policy only when inflation becomes a problem or unemployment improves,

Inflation is running below expected long term rate,

Only one dissenter in today’s decision,

Markets largely unchanged currently down 108 on the DOW

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“High-speed traders are using a hidden facet of the Chicago Mercantile Exchange‘sCME -0.65% computer system to trade on the direction of the futures market before other investors get the same information.

Using powerful computers, high-speed traders are trying to profit from their ability to detect when their own orders for certain commodities are executed a fraction of a second before the rest of the market sees that data, traders say.

The advantage often is just one to 10 milliseconds, according to people familiar with the matter and trading records reviewed by The Wall Street Journal. But that is plenty of time for computer-driven traders, who say they can structure their orders so that the confirmations tip which direction prices for crude oil, corn and other commodities are moving. A millisecond is one-thousandth of a second.

The ability to exploit such small time gaps raises questions about transparency and fairness amid the computer-driven, rapid-fire trading that increasingly grips Wall Street and confounds regulators.

The Chicago Mercantile Exchange, a unit of CME Group Inc., is the largest U.S. futures exchange, handling 12.5 million contracts a day on average in the first quarter, according to Sandler + O’Neill Partners L.P. High-frequency trading generated about 61% of all futures-market volume, up from 47% in 2008, according to Tabb Group.

Fast-moving traders can get a head start in looking at key information because they connect directly to the exchange’s computers, giving them the data just before it reaches the so-called public tape accessible to everyone else. The exchange connections contain a host of data, of which the advance notice of trade confirmations is only a piece.

All firms that connect directly to CME’s trading computers are able to get information ahead of the market when their trades are executed, firm officials say. But many companies are unaware of the advantage or choose not to use it, traders say, either because they don’t have the technology to take advantage of such tiny edges or employ different investing strategies.

CME spokeswoman Anita Liskey said the exchange operator is aware of the order delays, which industry officials refer to as a “latency.” …”

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Never trust the headline number. Uncle Sam needs to go back to school and brush up on those math skills.

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May day was celebrated with massive rallies against austerity…

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[youtube://http://www.youtube.com/watch?v=B1T8xgHdMEM 450 300]

 

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