Huge Piker at Amundi Likes Treasuries: Board Le Ark

The Global Head of Fixed Income at Amundi, Eric Bard, believes U.S. treasuries will continue to outperform, directly conflicting what the rocket scientists at Blackrock said today. The rationale for this ballsy call is slower than usual economic growth, which will, naturally, apply pressure onto asset prices. The same shit that’s been happening for the past two years.

“Markets are under pressure of slower economic growth, slow inflation,” Brard said. “We have a lot of inflows going into the U.S. market. We will see continuing flows in the coming months. This is good for U.S. Treasuries.”

Bard believes yields for the 10yr will drop ‘well below 1.5%’ in the not too distant future.

Oh, he also manages $1.2t.

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This fuckery is so large, I am beyond words. Apparently, the good folks in NYC will be paying for their luxurious air conditioners. It’s quite all right, frankly. New Yorkers are exceedingly wealthy and can afford such trivial spikes in price.

Spot electricity catapulted to $1,042.37 a megawatt-hour at 3:25 p.m., from less than $50 earlier in the day. The agency that oversees New York’s power system issued an alert in advance of the storm that cut the amount of electricity allowed to be carried across transmission lines feeding the city, energy data provider Genscape Inc. said.

Usually, starting up local generation can quickly ease price spikes. New York, however, is on day five of a heat wave that’s expected to last through Thursday, and backup oil-fired plants in the city are already online to help power air conditioners. So curtailing supplies is adding sparks to a power market that had, until Monday, been humming along quietly as New Yorkers boiled with the rising temperatures.

I’ve been meaning to share this for the past few days, but got distracted. I don’t know Gary, aside from his awesome wine videos, but I’m a fan. Since then, he’s built a kick ass ad agency and now travels the world to discuss the social renaissance that is upon us.

But not all roads are paved with gold, on the way towards paradise. Gary is calling for a 2000-2001 like collapse in the VC funded world of asshole private companies who have no idea how to book a profit. It is a great listen, well worth your 20 minutes.

This stock is a huge piece of shit. Clearly, there are pricing issues with their drug portfolio, especially for HCV.

Without putting this quarter under a microscope, I think it’s a fair analysis to assume any drug company who make a living off gouging American patients are in danger of missing numbers, in the foreseeable future.

The company missed on revenues and guided lower. This has been a value trap for some time now. At some point, apathy will take hold and shareholders will revolt.

Reports Q2 (Jun) earnings of $3.08 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus of $3.01; revenues fell 5.7% year/year to $7.78 bln vs the $7.8 bln Capital IQ Consensus.

Antiviral product sales, which include products in Gilead’s HIV and liver disease areas, were $7.1 billion for the second quarter of 2016 compared to $7.6 billion for the same period in 2015. HIV and other antiviral product sales were $3.1 billion compared to $2.7 billion for the same period in 2015.

HCV product sales, which consist of Harvoni, Sovaldi and Epclusa, were $4.0 bln (below estimates of ~$4.1 bln) compared to $4.9 billion last year, primarily due to a decline in sales of Harvoni; US HCV $2.25 bln vs. $2.1 bln ests.

Co issues guidance for FY16, lowers net product sales to $29.5-30.5 bln from $30-31 bln; reaffirms adj. gross margin 88-90%; raises R&D, lowers SG&A.
As of June 30, 2016, Gilead had $24.6 billion of cash, cash equivalents and marketable securities compared to $21.3 billion as of March 31, 2016. Cash flow from operating activities was $4.9 billion for the quarter.

During the second quarter and the first six months of 2016, Gilead utilized $1.0 billion and $9.0 billion on stock repurchases, respectively.

The stock is lower by 3.5% in the after hours.

As per conference call.

Updated FY16 Guidance:
Lowered net product sales guidance range to between $29.5-30.5 bln (prior $30-31 bln reiterated April 28)
Reiterated product gross margin guidance between 88-90%

Increased R & D expense guidance to $3.6-3.8 bln (prior $3.3-3.6 bln reiterated on April 28)
Lowered SG&A expense guidance range to between $3.1-3.3 bln (prior $3.3-3.6 bln reiterated on April 28)
The change in guidance from 1Q16 was primarily driven by patient flows & payer flows, did not change US prices, notes a ‘successful’ program from VA, more heavily discounted payers impacted results

Amount of people treated with a Sofosbuvir-Based Regimen +116.8% y/y to over 1 mln patients

Since the beginning of the year, access has improved, almost all major commercial payers have been joining Medicare and the VA.
When asked to provide color on Hepatitis B product developments:
2 compounds in clinical development, a vaccine in the later stages of being evaluated in non-surpressed patients, in the later stages of being evaluated in hep B patients, those data have been released & did not show any activity, doesn’t have high hopes this compound will work.

Notes the TLR seven agonist is just finishing the first cohort, co is currently initiating study, hopes to have the presentation by the extract deadline.
Pursuing three approaches to hepatitis B, one is adding another mechanism to the nucleotides because there is the observation that this might be undetectable
Sees little change in their Medicaid biz, notes public payers were about 45% of total, driven by VA
Estimates that 3 mln individuals remain affected with HCV in the U.S., approximately half of whom are diagnosed.

Expects sequential decrease in cash flow in the second half of the year, less focused on share repurchases in second half of year after a ‘very aggressive’ 1Q16 buyback

Boy did these guys wake up on the wrong side of the bed. The investment gurus ar Blackrock are forecasting sub 10% investment returns for all asset classes, as well as negative returns for treasuries.

Using the pretzel logic of Blackcock, rates will climb during a period of stagnation. If all asset classes struggle over the next 5 years, how does one assume rates will go higher? If money isn’t flowing into stocks or bonds, then where will it go? Perhaps towards higher taxes?

I cannot see a scenario unfolding that punishes both bonds and stocks, and vice versa. We’re at an ebb tide. Only one asset class can win.

Collin Gillis from BGC shits on Apple hard today, comparing the fundamentals of their business to the dead PC business. He noted how iPad revenues were down for 9 consecutive quarters and how the iPhone has been one giant bore, not to mention the monumental squandering of cash by its inept CEO, Tim ‘Single and Looking” Cook.

The lengths of Gillis’ ire grows deep and with the vengeance of 10,000 boiling volcanos. He believes the next $100b of value in Apple is, inexorably, to the downside.

WTI is at 3 month lows, beguiled by a brush fire amongst the analyst community, warning of heightened gasoline stocks. It’s important to note and bear mention, for the better part of the past month, all the while crude oil has been driven lower by an over abundance in supplies, oil stocks have risen.

According to Exodus, the median return for the independent oil and gas sector is up around 3%, while crude oil has dropped by more than 11%.

What sort of shit is that? Moreover, how long do you Devils expect fantasy land to continue to infect the minds of investors?

Oil stocks are getting hammered today.

The issue of oil ties in directly to the fate of American markets, not BREXIT. The market cannot trade higher with oil diving lower, not with a debt storm brewing in less than 12 months. The idea that the Fed is contemplating another rate hike again is bellyaching comical. They don’t have a leg to stand on and should refrain from jawboning about rate hikes, when we know they’re full of shit. Their propaganda campaigns have worked markets up into a frenzy. After all, we’re all record highs. But the institution of the Federal Reserve and its integrity should be above these games.

Okay, try to stay with me on this one for more than a few seconds. As the good analyst from Morgan points out, the true demand for crude is the refineries. They buy the stuff, refine it, then sell it to you. Well, apparently there is a very grave cause for concern, as an oversupply of gas stocks threatens the very fabric of western civilization.

Cliff notes version:

Gas inventories are at 5 yr highs.
Crude oil demand trending below refined product demand for first time in three years.

Doom

Any questions?

The global oil market is “severely oversupplied” with gasoline — with stocks at a five-year high — serving as a blow to crude prices from next month, reckon Morgan Stanley analysts led by Adam Longson.

In a report published on Sunday, the analysts foresee “worrisome trends” for oil supply and demand, led by refineries generating too much gasoline in recent months. Faced with the need to cut back on capacity utilization to protect profit margins, these refineries are set to crimp crude oil purchases and drag prices lower, the analysts say.

“Crude oil demand is trending below refined product demand for the first time in three years,” they write. “Refineries are the true consumer of crude oil, and crude oil demand is ultimately more important than aggregate refined product demand for oil balances. Given the oversupply in the refined product markets, fading refinery margins, and economic run cuts, we expect crude oil demand to deteriorate further over the coming months.”

Refinery stocks have been ravaged this year, with shares of WNR off by 40%. Others in the space, such as ALJ, HFC, VLO and DK sport similar losses.

Yeah, this is one of those watershed moments that you normally don’t pay attention to, because you’re too busy jamming cocaine cubes into your noses. But, amidst all the awesomeness and fun, China just declared news printed on the internet illegal. If you want to post ‘current affairs’, you’ll need to get it from state sponsored news agencies. This is their verbiage, not mines.

China’s top internet regulator ordered major online companies including Sina Corp. and Tencent Holdings Ltd. to stop original news reporting, the latest effort by the government to tighten its grip over the country’s web and information industries.

The Cyberspace Administration of China imposed the ban on several major news portals, including Sohu.com Inc. and NetEase Inc., Chinese media reported in identically worded articles citing an unidentified official from the agency’s Beijing office. The companies have “seriously violated” internet regulations by carrying plenty of news content obtained through original reporting, causing “huge negative effects,” according to a report that appeared in The Paper on Sunday.

The agency instructed the operators of mobile and online news services to dismantle “current-affairs news” operations on Friday, after earlier calling a halt to such activity at Tencent, according to people familiar with the situation. Like its peers, Asia’s largest internet company had developed a news operation and grown its team. Henceforth, they and other services can only carry reports provided by government-controlled print or online media, the people said, asking not to be identified because the issue is politically sensitive.

The sweeping ban gives authorities near-absolute control over online news and political discourse, in keeping with a broader crackdown on information increasingly distributed over the web and mobile devices. President Xi Jinping has stressed that Chinese media must serve the interests of the ruling Communist Party.

Off the top of my head, this is bad news for SOHU and BIDU. Maybe this explains the jump in SPU, as people are drinking the koolaid, literally, and perhaps spiking it with a little life ending arsenic.

I don’t need to see MOAR. China is a short, this much I’m convinced. Shares of motherfucking Sky People Fruit Juice are higher by 600% the last month.

Look at all of them gains the past 5 days.

I don’t give a shit what the market pundits say, Dennis Gartman and the other crazy people inside my teevee box. This right here is the apocalypse. There is nothing further needed to discuss.