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Eric Ostertag reaching the end of the line as Poseida chief, will become executive chairman; Alector exec named CEO of Pfizer-backed LNP biotech

Eric Ostertag
→ The Poseida adventure takes another turn as CEO Eric Ostertag dives into the role of executive chairman and CBO Mark Gergen steers the ship starting Feb. 1. Ostertag talked through Poseida’s early proof-of-concept data with its PSMA-target

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Eric Ostertag

→ The Poseida adventure takes another turn as CEO Eric Ostertag dives into the role of executive chairman and CBO Mark Gergen steers the ship starting Feb. 1. Ostertag talked through Poseida’s early proof-of-concept data with its PSMA-targeting CAR-T for prostate cancer patients in August 2021, and the San Diego biotech followed that up by inking a $3.6 billion-plus gene therapy deal with Takeda in October.

The next month, Poseida shuttered its P-BCMA-101 autologous program, with Ostertag noting that autologous CAR-T is “going the way of the dinosaur.”

Ostertag founded Poseida in 2015 and had been its lone CEO, while Gergen — who came on board in 2018 after COO stints at Halozyme and Mirati — has been president and CBO since July 2020.

Shehnaaz Suliman

Shehnaaz Suliman has been named CEO of ReCode Therapeutics, which is developing therapies for cystic fibrosis and primary ciliary dyskinesia using its lipid nanoparticle (LNP) delivery platform. She succeeds David Lockhart, who will continue as president but take on the role of CSO instead. A Gilead and Roche vet, Suliman is a chief executive for the first time after three years as Alector’s president and COO, and she’s also a board member at Ultragenyx and 10x Genomics. From 2017-19, Suliman was SVP, corporate development and strategy for Theravance Biopharma. ReCode has piled up the cash with a pair of $80 million financing rounds, including a Pfizer-backed Series B in October 2021.

→ While its Covid-19 pill molnupiravir grabs headlines in the advent of the Rob Davis era, Merck has named Marc Levesque VP, immunology discovery and head of the drug giant’s Exploratory Science Center in Cambridge, MA, a spokesperson tells Peer Review. Levesque hails from AbbVie, where he was medical director, immunology clinical development and later the senior director, immunology.

David Jimenez

J&J has enlisted longtime vet David Jimenez as president of Janssen Immunology, taking over a business that includes such drugs as Tremfya and Stelara. Jimenez, who started out as a sales rep at J&J in the late 1990s, was Janssen’s president of infectious diseases from 2018-20 and had served as president of the pulmonary hypertension business since 2020.

Nirogy Therapeutics — co-founded by Ron DePinho and launched almost a year ago with a modest Series A to push its small molecule lactate transport inhibitor into the clinic — has tapped Simon Pedder as CEO. His predecessor, Vincent Sandanayaka, will now be Nirogy’s president and CSO. Pedder, the former head of the hepatitis franchise at Roche and the ex-CEO of Cellectar Biosciences, ended a six-year association with Athenex, where he was chief business and strategy officer.

Riccardo Braglia

→ Some big changes are coming Helsinn’s way and it’s starting with a CEO change. The family-owned business, run by the Braglia family, is now changing hands from Riccardo Braglia to Giorgio Calderari. Calderari has been with the company for the last 36 years and served in a variety of positions such as group general manager. COO and chief manufacturing officer. Meanwhile, Braglia will step into his dad’s old role as executive chairman.

For the rest of the family, Gabriele Braglia, founder and father to Riccardo Braglia, has been named “honorary chairman,” while his grandson, Gabriele Edoardo Braglia, joins the board of directors. Additionally, Siddharth Kaul, who hails from P&G and Novartis, is also joining the board.

Robert Paul is ditching his CMO title at Alector in favor of a new CEO hat at Nine Square Therapeutics — the company created in 2020 by Apple Tree Partners and UCSF scientists Matthew Jacobson, Steve Altschuler and Lani Wu. Paul started in his role as CMO of Alector back in 2016 and before that had a nearly eight-year career at Genentech in a variety of roles in the company’s medical and neuroscience clinical development organizations.

Lucinda Crabtree

→ It won’t take effect until March 31, but Andrew Oakley has decided to retire as CFO of Autolus, and SVP of finance Lucinda Crabtree is all set to replace Oakley at Christian Itin’s T cell therapy shop. Oakley, the obe-cel developer’s CFO since 2018, has also been the finance chief at Actelion (from 2003-13), NovImmune, Vectura Group and Sosei Group Corporation. Crabtree, a former business analyst at AstraZeneca, first arrived at Autolus in January 2020 as head of investor relations after her time at Woodford Investment Management.

Steven Bellon

Carl Decicco has retired as CSO of Flagship’s Foghorn Therapeutics as Steven Bellon succeeds him at the Cigall Kadoch-founded biotech that concentrates on the chromatin regulatory system. Decicco became CSO late in 2018 after a 16-year career at Bristol Myers Squibb, where he was head of discovery. In June 2016, Bellon was selected as Foghorn’s head of discovery, and earlier at Constellation Pharmaceuticals, he served as executive director and head of structural biology, lead discovery and project management. Foghorn made some noise in the 2020 IPO boom with a $120 million offering.

Yan Moore

→ Another Flagship company, Omega Therapeutics — a startup focused on epigenetic medicines that launched in September 2019 and scored $126 million from a Series C in March 2021 — has tapped Yan Moore as CMO. Moore brings Big Pharma experience from Bristol Myers, GlaxoSmithKline and Sanofi, and he was previously Ipsen’s SVP, head of oncology therapeutic area since 2018. He has also been CMO and SVP, clinical development with Anchiano, which merged with Chemomab last year.

Matthew Klein

→ Peer Review has been apprised of leadership moves at PTC Therapeutics, where Matthew Klein and Lee Golden have earned promotions. Klein, now COO, first arrived at PTC in 2019 as global head of gene & mitochondrial therapies, becoming chief development officer in 2020. Golden climbs to CMO after his stint as PTC’s head of global clinical development. Golden’s previous CMO post was with Espero BioPharma and he’s also the former SVP, therapeutic business unit head, CV, pulmonary and CNS at Mesoblast. PTC remains undaunted with its Duchenne therapy Translarna even after a Phase II fail almost a year ago.

Martha Rook

Daphne Koller’s gang at insitro has unloaded several appointments, starting with Martha Rook (chief technical operations officer), who had held the same post at Flagship’s Sigilon and finished her 13 years at MilliporeSigma as VP, head of gene editing & novel modalities. Elsewhere, Jevan Soo Lenox (chief people officer) is a McKinsey vet who was previously the chief people and culture officer of online stylist Stitch Fix; Ellen Berg (VP, biomarker sciences) got her start as a senior scientist at AbbVie and jumps on board from Eurofins Discovery, where she was CSO of translational biology; and finally, Theofanis Karaletsos (VP, data science/machine learning) is a founding member of Uber AI Labs who had been working as a staff research scientist at Facebook, where insitro poached VP of product Tom Stocky in September.

→ The last time we saw Iovance in Peer Review, then-CEO Maria Fardis sprinted out the door as the lifileucel saga dragged on with the FDA’s request for more potency assay data in May 2021. Perhaps the appointment of an FDA lifer can expedite things as Iovance brings in Raj Puri as EVP, regulatory strategy and translational medicine sometime in Q1. Puri has 33 years of experience with the agency, 19 of those as the director of the Division of Cellular and Gene Therapies (DCGT) in the Office of Tissues and Advanced Therapies. Lifileucel keeps churning out data in the runup to a BLA submission for the tumor-infiltrating lymphocyte (TIL) therapy that’s been pushed back to this year.

James Tursi

James Tursi has been appointed EVP, global R&D of Endo, which just announced a change in marketing strategy from Pro Football Hall of Famer John Elway to everyday folks in its Dupuytren’s contracture ads. The GSK vet will finish up his time as CSO of Ferring Pharmaceuticals and start work at Endo on Jan. 18. Tursi also spent nearly two years at Antares Pharma as R&D chief and CMO, and he’s a member of the board of directors at Agile Therapeutics.

Sohanya Cheng

→ With first-year CEO Richard Paulson at the controls, cancer-focused Karyopharm has promoted Sohanya Cheng to chief commercial officer. Seven months ago, Karyopharm brought Cheng on board as SVP of sales and commercial operations after a short stay at Arrowhead as VP of marketing and more than a decade at Amgen. It’ll be her job to devise commercialization strategies surrounding multiple myeloma drug Xpovio (selinexor), which received a controversial rubber stamp in 2019 and an additional approval in combination with bortezomib and dexamethasone in late 2020.

Dave Morris

→ A couple months after Valo Health called off its merger with SPAC partner Khosla Ventures, David Berry’s Flagship biotech has pegged Dave Morris as CMO. During his days at Novartis, Morris — who just completed a two-year run as CMO of Enterprise Therapeutics — was global head of clinical operations, analytics, and regions, and he was also operating partner of the Novartis Venture Fund. A year ago this week, Valo pulled in a $190 million Series B that ballooned to $300 million in March with additional funding from Koch Disruptive Technologies.

Erin Colgan

→ It’s not lost on Peer Review that as Season 4 of “Cobra Kai” dominates Netflix, Boston cancer player Sensei Biotherapeutics has handed out promotions to Erin Colgan and Robert Pierce. Colgan, the new CFO and a nine-year Vertex alum, had been Sensei’s SVP of finance and administration and joined the team in July 2020 from Intarcia. Pierce has made the climb to chief R&D officer after nearly two years as the CSO of John Celebi’s squad. Once the scientific director of the immunopathology lab at Fred Hutch, Pierce was the CMO/CSO at OncoSec, and during his six years at Merck, he was a medical lead for Keytruda’s trials in merkel cell carcinoma (MCC) and cutaneous T cell lymphoma (CTCL).

→ Liquid biopsy company Bluestar Genomics has pulled in David Mullarkey as CEO, taking over for acting CEO and CSO Samuel Levy (Levy will continue in his role as CSO). Mullarkey comes from another CEO stint at Omniome, where he raised over $150 million. Prior to that, Mullarkey was president and COO of Ariosa Diagnostics and held roles at J&J, Eli Lilly, Valeant Pharmaceuticals and Dow Pharmaceutical Sciences.

Arndt Rolfs

→ Ex-Centogene chief Arndt Rolfs has been named CEO of US-German digital healthcare and diagnostics company Arcensus as of Jan. 1, succeeding Michael Schlenk. In December 2020, Rolfs stepped down at Centogene and was replaced by Andrin Oswald, who’s been on a medical leave of absence “for a period of at least four weeks” that began just before the holidays.

Brian Lestini

→ Back in April, Peer Review told you about Brian Lestini taking the CMO job at Waltham, MA-based Pyramid Biosciences, and this week he’s worked his way up to CEO. While at Bristol Myers, Lestini had a front-row seat to such drugs as Opdivo and relatlimab as VP, oncology development before joining Pyramid Biosciences. His predecessor, co-founder Kollol Pal, will settle into the CSO post as lead candidate PBI-200 —a tropomyosin receptor kinase (TRK) inhibitor — moves through Phase I trials for such oncology targets as primary and metastatic brain cancers.

Rosemary Harrison

Rosemary Harrison has landed at T cell therapy biotech TCR² Therapeutics as chief business and strategy officer. Harrison had spent a year as SVP of corporate development and strategy at Trillium and was a key player in the $2.2 billion Pfizer buyout that was completed in November — and the drug giant wasn’t through on the M&A front, with the acquisition of Arena a month ago. From 2015-18, Harrison was head of portfolio management and strategic planning at the Novartis Institutes for Biomedical Research.

Sue Dillon’s Centyrin-focused Aro Biotherapeutics has brought in Sukumar Sakamuri as chief technology officer. Sakamuri, who co-founded immuno-oncology company Tollnine, was previously VP and head of chemistry at Ambrx since October 2018. Dillon and co-founder Karyn O’Neil started 2021 with an $88 million raise led by Johnson & Johnson Innovation.

Adam Taich

Adam Taich has been named CBO of proteomics player SomaLogic, which reverse merged with CM Life Sciences II — the second SPAC from Eli Casdin and Keith Meister — back in March. Taich stepped away from Thermo Fisher Scientific after 19 years, closing out his career there as VP and general manager of the molecular biology business.

Yvonne McGrath

→ Immuno-oncology biotech iTeos Therapeutics has promoted Yvonne McGrath to CSO. McGrath has served as VP of R&D since June 2020, and prior to that, she was CSO at Complix. EOS-448, iTeos’ anti-TIGIT monoclonal antibody that Hal Barron is rolling the dice on at GSK in a deal worth $625 million upfront, is in early-stage trials.

Thomas Adams

→ San Diego’s Cardiff Oncology has installed Tod Smeal as CSO and Charles Monahan as SVP, regulatory affairs. Smeal changes direction here after a quick stop as chief scientist of Hexagon Bio, and the longtime Pfizer vet has also been Eli Lilly’s CSO of cancer biology. Monahan was previously the head of regulatory affairs with Erytech Pharma and has held regulatory posts at companies such as Millennium, Aveo Pharmaceuticals and Eleven Biotherapeutics.

The Cardiff Oncology family is also mourning the loss of former CEO Thomas Adams, who died Jan. 9 at age 78. Adams was chief executive when the company was known as Trovagene from June 2018 until it rebranded to Cardiff Oncology in May 2020 under current CEO Mark Erlander. From May until December 2020, Adams served as Cardiff Oncology’s executive chairman. Hepion Pharmaceuticals, where Adams had held a seat on the board since 2014, announced his death on Wednesday.

→ Gene silencing company NeuBase Therapeutics has reeled in Todd Branning as CFO. Branning joins the company after a stint as CFO at Takeda spinout Phathom Pharmaceuticals. Branning has also served as SVP, CFO at Amneal Pharmaceuticals and Teva. Earlier in his career, Branning had roles at Allergan, PricewaterhouseCoopers, PPG Industries and Merck.

Rafal Kaminski

Angelini Pharma kicked off the M&A festivities in 2021 by purchasing Arvelle Therapeutics, and the Italian biotech starts 2022 by picking up Rafal Kaminski as CSO. Kaminski spent 11 years at UCB, then left for Roche to be the Swiss pharma’s vice director, head neurosymptomatic domains, neuroscience and rare diseases. For the last two years, Kaminski led R&D and was CSO of Warsaw-based OncoArendi Therapeutics.

Melanie Gloria

→ The crew at Los Angeles-based Acelyrin isn’t messing around as Sean Harper and Beth Seidenberg at Westlake Village Partners led a $250 million Series B in November, and the biotech has added another Horizon vet to its ranks with COO Melanie Gloria. Since 2018, Gloria had been with Tim Walbert’s team and served as SVP of development operations; prior to that, she was in clinical program development with Abbott and then AbbVie. Gloria needs no introduction to the Acelyrin C-suite: CEO Shao-Lee Lin, president Robert Carey and CMO Paul Peloso have all worked with her at Horizon.

Ciara Kennedy

Ciara Kennedy has added to her list of titles, chairing the board at Aristea Therapeutics while the San Diego inflammatory disease startup also grabs Fabio Magrini as executive medical director. Kennedy, the ex-Amplyx chief, is now the president and CEO of Sorriso Pharmaceuticals. Heading over to Aristea from Genentech, where he was principal medical director, neuroimmunology and medical director, neuroscience, Magrini’s other Big Pharma experience ranges from Pfizer to Eli Lilly.

Star Seyedkazemi

Star Seyedkazemi has taken on the role of chief development officer at much-maligned Adverum Biotechnologies, reeling from a diabetic macular edema patient who experienced vision loss in one treated eye and mired in safety issues that further materialized in 2021. Seyedkazemi was previously VP, portfolio management for research and development at Pliant Therapeutics after serving as Allergan’s associate VP, clinical development.

Minori Rosales

Sesen Bio, coming off a rocky year with its bladder cancer drug Vicineum that featured a CRL and alleged serious misconduct in its 130-person study, has brought on Minori Rosales as chief development officer (effective Jan. 24) and Stephanie Vigue as director of finance (effective Jan. 17). Rosales most recently served as VP, clinical research at MacroGenics, and before that, she was a VP at MedImmune. Vigue most recently served as corporate accounting manager/interim controller at The Fi Company, and has also served as manager, corporate accounting at Spectrum Pharmaceuticals.

Currax Pharmaceuticals, which late last year hired Novo Nordisk vet Ed Cinca, has snagged Michael Kyle as SVP, CMO — who will lead the company’s exploration of smoking cessation opportunities through the CX-101 program. Kyle comes aboard from Jiangsu Hengrui Pharmaceuticals, where he was head of development. Kyle has also held roles at Pfizer as US medical director of established products, medical affairs; CMO, Pfizer Consumer Health; and VP, head of global clinical services and operations of Upjohn.

Gwendolyn Binder

→ There are two promotions to discuss at Penn spinout Cabaletta Bio: First, Gwendolyn Binder’s title has changed from EVP to president of science and technology. She joined Cabaletta in the company’s infancy after nearly eight years as head of translational sciences and later chief technology officer of Adaptimmune. Meanwhile, Arun Das — the erstwhile executive director of new product planning and business development — moves on up to CBO.

→ Shanghai-based CAR-T player JW Therapeutics, which raised $300 million in its IPO on the Hong Kong Stock Exchange in November 2020, has announced two appointments this week: Shaun Paul Cordoba in the newly-created CSO role, and Raymond Hage as SVP of corporate development. Before joining JW, Cordoba was the executive director of synthetic biology and cell signaling at Autolus. Hage, the founder of Hapten Sciences, has also served as SVP of commercial operations and COO of Novavax.

Stephen Smolinski

→ With a pipeline that includes AVTX-002 for such indications as Covid-19 ARDS and inflammatory bowel syndrome, Avalo Therapeutics has locked in Stephen Smolinski as chief commercial officer. Smolinski comes to Avalo from Sobi, where was the head of US Gamifant and global immunology strategic marketing. He’s been a CCO before at Selecta Biosciences and he was head of Sanofi Genzyme’s North American rheumatology business unit at one of several stops where he gained Big Pharma commercial experience (Roche/Genentech, Bristol Myers and J&J).

Dominic Labriola has been appointed SVP and chief data and analytics officer at Pennsylvania-based NASH player Madrigal Pharmaceuticals. Before joining Madrigal, Labriola spent more than two decades at Bristol Myers as head of global biometric sciences.

Philip Dana

Philip Dana has signed on as chief human resources officer of Bayer gene therapy sub AskBio, joining the likes of Jude Samulski and Kathy High on the team. Dana spent the last two years leading HR at Dendreon. After bringing AskBio into the fold, Bayer bought Vividion for $2 billion last August and struck a CRISPR deal with Mammoth just this week.

APIE Therapeutics is bringing on two new execs to its leadership team with the appointments of Debra Bowes as CBO and Seth Hetherington as CMO. Bowes comes aboard with stints at Chevy Chase BioPartners (CEO), Maxcyte Cell Therapy (CBO), MedImmune, Amylin Pharmaceuticals, Pfizer and Centocor. Meanwhile, Hetherington brings to the table experience from ReViral (CMO), Genocea Biosciences (CMO), Icagen (SVP of clinical and regulatory affairs), Inhibitex and GSK.

Ana Limón

→ Takeda vet Ana Limón has been appointed SVP of clinical development and global medical affairs at Oryzon Genomics. Limón, who started her career at Amgen, was head of the Takeda’s oncology pipeline, global medical affairs and spent the last year as senior director and global program leader at Deciphera.

ARCH Ventures is adding Kaye Foster as a venture partner. Foster currently serves as a senior advisor at Boston Consulting Group. Prior to her current role, Foster was VP of global human resources at Onyx Pharmaceuticals until its acquisition by Amgen. Before that, Foster was with J&J (global human resources leader) and Pfizer.

Ruth Krestin

→ French medtech Tissium has selected Ruth Krestin as VP of portfolio strategy. Krestin had held various roles in the last six years with AstraZeneca, including competitive intelligence director, cardiovascular, renal and metabolism (CVRM). Sofinnova led Tissium’s Series C last August that totaled $56.5 million (€50 million).

→ Pennsylvania biotech Annovis Bio — whose stock shot up 140% after seeing cognitive improvement scores increase by 30% last May for patients with either Parkinson’s disease or Alzheimer’s disease — has brought on Eve Damiano as SVP of regulatory operations. In addition, the company has promoted Cheng Fang to the position of president of R&D. Damiano joins with experience from her times at Centocor, MedImmune, OraSure Technologies and Vicuron Pharmaceuticals. Meanwhile, Fang joined Annovis last May as VP of research.

→ Stem cell-focused BioRestorative Therapies has recruited Robert Paccasassi as VP of quality assurance/regulatory compliance. Paccasassi hails from Merck KGaA, where he served as director, corporate quality systems. Before that, Paccasassi had stints at Regeneron, Millennium and Biogen.

Paul Chu

→ San Diego-based Phanes Therapeutics has named Paul Chu as VP of business development. Chu joins the company from Huyabio International, where he served in the same role. Additionally, Chu has had similar roles at AiViva BioPharma, UroGen Pharma and Allergan.

→ CRO Parexel has tapped Wyatt Gotbetter as head of worldwide access consulting. Gotbetter hops aboard after a stint as a partner at Health Advances, Parexel’s independent strategic healthcare consulting unit. Before that, Gotbetter was head of new product commercialization at Biogen.

June Lee

→ Cardio biotech CinCor Pharma, which recently hit Nasdaq with an upsized IPO after a $143 million Series B in October, has elected June Lee to the board of directors. Lee, the founder and ex-CEO of Esker Therapeutics (now Alumis), is also on the boards of Tenaya Therapeutics, Eledon Pharmaceuticals and GenEdit.

→ J&J vet Arturo Molina has been added to the board of directors at Forma Therapeutics, the Watertown, MA biotech that’s developing its lead program etavopivat for sickle cell disease. Molina has been CMO of Sutro Biopharma since 2016.

→ As Peter Thompson resigns from the board of directors at New Jersey-based PMV Pharma, the door opens for Kirsten Flowers to join a board chaired by Rich Heyman. Flowers is Kura Oncology’s chief commercial officer and the ex-SVP of commercial operations at Array Biopharma.

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Economics

Oil Could Be The Haven Stocks Traders Need To Shelter From Fed

Oil Could Be The Haven Stocks Traders Need To Shelter From Fed

By Nour Al Ali, Bloomberg Markets Live commentator and analyst

Oil is starting to look like an unlikely haven from the stocks selloff in the run-up to anticipated Fed tightening.

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Oil Could Be The Haven Stocks Traders Need To Shelter From Fed

By Nour Al Ali, Bloomberg Markets Live commentator and analyst

Oil is starting to look like an unlikely haven from the stocks selloff in the run-up to anticipated Fed tightening.

Traders are pricing lower volatility in the commodity than in the Nasdaq and S&P 500. Barometers of market anxiety for both indexes have shot up recently, suggesting trader sentiment is souring. Meanwhile, the CBOE Crude Oil Volatility Index, which measures the market’s expectation of 30-day volatility of crude oil prices applying the VIX methodology to USO options, shows that oil prices are expected to remain relatively muted in comparison.

With a producer cartel to support prices, the outlook for oil is more sanguine, even if the Fed raises rates. The commodity has ample support, with global oil demand expected to reach pre-pandemic levels by the end of this year. The U.S. administration has been pushing oil-producing nations under the OPEC+ cartel to ramp up output, while the group has stuck to a modest production-increase plan and is expected to rubber-stamp another 400k b/d output hike when they meet next week. This means that oil is likely to stay a lot more stable than in recent years.

The relatively low correlation between the asset classes provide diversification benefits. The relationship between the S&P 500 and the global oil benchmark is weak and lacks conviction; it’s even weaker between the Nasdaq 100 and Brent crude contracts. The divergence in price action this week could indicate that stocks have been tumbling in fear of a hawkish Feb, more so than geopolitical risk alone. That would perhaps offer traders an opportunity to seek shelter amid stock volatility in anticipation of the Fed’s next move.

Oil might have tracked the decline in stocks at the beginning of this week, but the commodity is back to its highs now. It’s up close to 15% this year, while the S&P 500 is struggling to reclaim its footing after plunging as much as 10%.

Tyler Durden Wed, 01/26/2022 - 13:45

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Stocks

Who’s Afraid Of Jerome Powell?

Who’s Afraid Of Jerome Powell?

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

baller (ˈbɔːlə)
n
slang someone, usually a man, who lives in an extravagant and materialistic manner, tending to be something of a socialite

My wife…

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Who's Afraid Of Jerome Powell?

Authored by Tom Luongo via Gold, Goats, 'n Guns blog,

baller (ˈbɔːlə)
n
slang someone, usually a man, who lives in an extravagant and materialistic manner, tending to be something of a socialite

My wife and I got sucked into watching the Dwayne Johnson series Ballers on HBOMax over the weekend. Aside from being hilarious, it struck me how much of a microcosm of our world this seemingly alien world of twentysomething millionaires and rapacious billionaires really is.

When you drill into the details, the world of Ballers really isn’t that far from ours.

For those that don’t know the setup, broke former NFL bad boy Johnson is trying to turn a new leaf “monetizing his friendships” to help NFL players hold onto all that money they are making at an age when they have zero ability to contemplate their own mortality.

One storyline from the first season is especially relevant. A kid with a good heart, Vernon, banking on his next big contract, is out of money having spent it all on being ‘loyal’ to his friends and family, throwing parties, inviting 40 people to a business lunch, etc.

His loyalty is so out of control he has to borrow money from Johnson (who’s broke mind you) to bridge him until the contract comes through. Of course there are complications and hilarity ensues. The typical Hollywood fantasy fare. Nothing groundbreaking, eventually things work out (mostly).

Johnson has to endure a lot to get Vernon to see the truth, put limits on the situation and get Vernon to properly save his money. The pitch is the right one: put it to work and pay everyone for the long term, not just for tomorrow.

Sound familiar?

No, because that’s exactly what we don’t preach in this world of central bank issued easy money. This shouldn’t be a central conflict, it should be a given.

Because this background for this story is playing out at every level of our society, all a consequence of too much money flowing around finding ways to corrupt everything it touches.

Ballers is all about the corruption money brings to those few thousand people in the NFL and their organizations because of the millions of people who spend too much money on a passing fancy, entertainment.

The NFL, like all pro sports, is nothing but a money funnel with a Federal Reserve sized Hoover attached to it. It’s the ultimate corruption of e pluribus unum. From many to one.

Take a little bit from all of us, time and again to help us relieve the stress of the shitty world they’ve built. Give some of it to the rubes who play the game, who blow it on hookers, high end cars, and drugs, while the lion’s share gets sucked right back up into the same oligarch class that created it in the first place.

But it’s no different than you or me, buying shit we don’t need on credit, self-medicating with pro sports, alcohol, video games, day-trading cryptos on Robinhood, yelling at racists on Twitter or my personal favorite, a ridiculous board game collection.

We’re all ballers to one degree or another, spending easy money on distractions rather than facing the reality that the most unsustainable thing about our society is the money which makes it all happen.

And before anyone revokes my libertarian creds, I pass no judgment on this. It’s all voluntary exchange, mostly. At the very least it has the appearance of being voluntary.

That said, here we are waiting to hear from the philosopher kings at the FOMC and the markets are melting down around our ears.

The tantrums that have begun are no different than those pitched by Vernon’s friends over having the barest amount of fiscal discipline imposed on them.

Everywhere I look everyone is saying some version of the same thing, “Hey man, Don’t take the punch bowl away.” They’d say it a lot more colorfully on Ballers, but being white I’m not allowed to use that language.

From Chairman Xi leading off this year’s virtual Davos with a plea not to hike rates to the howls from the Financial press including some Austrians, pleading that he can’t possibly raise rates because it would cause a market meltdown and blow out the Federal budget, Powell is now off everyone’s invite list to party on the yacht.

I get the feeling that some folks would rather be right about their hyperinflation theories rather than actually figuring out what’s really going on.

But the reality is that something has changed and the markets are finally coming to that conclusion.

For months I’ve been arguing that Jerome Powell ignited a firestorm when he raised the Reverse Repo Rate by 0.05%, pulling trillions in base liquidity from overseas markets while handing U.S. banks all the collateral they needed.

It’s created a political firestorm on Capitol Hill who tried to oust him from the Chair and failed. They got three of his fellow hawks, but not the king. He was able to run out the political clock on both Build Back Better and opposition to his reappointment.

But it doesn’t happen if Powell doesn’t have the backing of the people behind him.

And who backs Powell? The New York Fed, that’s who.

That leads you to the conclusion that all is not hunky dory in Oligarchville. That, shock of shocks, narcissists only like each other when they are sucking our lives and souls away. But when they start taking from each other, that’s when the knives come out.

It seems incredible to me that many people won’t consider this idea, that these people don’t like each other, and aren’t willing to hand over their business and their wealth without a fight?

Because that’s what’s implied when everyone jumps up and down and screams at Powell to “Save them!” from deflationary forces.

And he looks down from the Marriner-Eccles building and says, “No.”

It’s time to put it all in order. With ‘Build Back Better’ dead there is no more insane new spending to monetize. There is no reason for the Fed to keep up QE or rates at the zero-bound. Savings is down, money is circulating again. Inflation isn’t transitory.

People want to work. COVID-9/11 is behind us. The anger over losing two years is just getting started but that’s a different wrinkle to this story for another day.

If the Fed isn’t intimidated by the recent weakness in stocks, in truth a healthy correction after a massive run, and raises rates on Wednesday we have our answer as to what Powell and friends are willing to do. Whatever your opinion of it is, it will not be a ‘policy error’ but a clear-eyed understanding that it’s time to rein it in, change the direction of the big boat, and begin living within our means.

If he doesn’t it won’t be the opposite signal. It will simply mean that they’ll take another couple of months to nail down the particulars, namely getting proper control over the O’Biden administration, and begin hiking on schedule per the current expectations in the Eurodollar futures market.

Has anyone looked at the ratings for pro sports? Old media? Hollywood box office receipts? All down. Netflix is getting killed because it’s growth cannot sustain its valuation, much like a lot of the NASDAQ. This is something that should have happened two or three years ago, just like Tesla.

But didn’t because of COVID-19 and the massive wealth transfer the stimulus provided to them during the absence of sanity oceans of money always produces.

That said, these are all unsustainable Ponzi scheme masquerading as viable industries based on cheap money and malinvestment in politically-motivated production.

Now I’m not suggesting for a second that Powell is some kind of saint or anything. He’s no savior sent down to redeem us sinful ballers from our excesses. No sir. He represents the very people that helped create this mess.

But at the same time, they want to remain where they are. They are not willing to hand their power and their money over to another group within the cartel.

They didn’t get where they were putting their money on the table to bail out anyone else.

And they won’t this time.

All I’m doing here is assessing what everyone’s real motivations are and who they answer to. To quote another, far more classic television show“The universe is run by the interweaving of three elements: Energy, matter, and enlightened self-interest.”

And, to me, where’s the enlightened self-interest angle for the NY Boys, represented by Powell, for turning over their business to a bunch of European and Chinese commies?

When you step back and really look at what’s happening, they have already told Europe, China and all those emerging markets currently whining, the post-COVID world you created is your mess now.

This is why I’m convinced the Fed will hike and hike aggressively this year, maybe starting on Wednesday.

There is no deal possible between Wall St., City of London and Europe. In that game, Europe loses. If China wants to play hardball and default on foreign-held property debt, fine. Have fun attracting any capital in the future.

All the fiscal projections of the U.S.’s insolvency are great (and accurate) but I hate to burst anyone’s bubble, literally, but you CAN taper a Ponzi scheme if you’re 1) the biggest Ponzi and 2) control the flow of funds into them.

And if you don’t think Powell and his backers at the NY Fed aren’t willing to sacrifice a few thousand points on the Dow or even a few points of GDP, to restructure the US’s finances for the long term while the Fed hands them all the collateral and liquidity they need to keep playing while everyone else craps out, I do believe you are terminally naïve.

It’s what they call playing hard ball.

There are two ways to reset the monetary system. The first option is printer go brrr and default by switching out the old currency for a new one. The other is collapse the old system by returning risk and rebuilding it after the malinvestment is gone.

Paul Volcker chose the latter to finally establish the Dollar Reserve Standard as the only game in town. Nixon set the process in motion, Volcker closed the deal. It’s what established today’s game.

We are at an inflection point in history, both monetary and geopolitical.

I discussed this in my latest podcast with Alex Krainer and believe the rules of the game have fundamentally changed. The next game will look a lot different than the baller one we’ve been playing.

Those who won’t adjust to that or admit it should be very afraid of what Jerome Powell does next.

*  *  *

Join my Patreon if you hate the game, not the playa.

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Tyler Durden Wed, 01/26/2022 - 12:25

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Boeing Jumps On First Positive Cash Flow Since 2019 Despite Another Huge 787 Charge

Boeing Jumps On First Positive Cash Flow Since 2019 Despite Another Huge 787 Charge

It was another painful quarter for Boeing, which reported revenue and earnings both of which missed expectation amid mounting 787 Dreamliner losses which…

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Boeing Jumps On First Positive Cash Flow Since 2019 Despite Another Huge 787 Charge

It was another painful quarter for Boeing, which reported revenue and earnings both of which missed expectation amid mounting 787 Dreamliner losses which amounted to another $3.5 billion in pre-tax non-cash charge s (focused on actions required to resume deliveries) however a surprise boost in 737 Max output from 19 to 26 per month was welcome news as was the unexpected end of the company's chronic cash burn as Boeing reported its first positive free cash flow since early 2019.

First, this is what Boeing reported for Q4:

  • Revenue $14.79 billion, -3.2% q/q, -3.3% y/y, missing estimates $16.67 billion (Bloomberg Consensus)
  • Core loss per share of ($7.69), on the continued Dreamliner charges, which was an "improvement" from the whopping ($15.25) reported but clearly missed estimates of (0.42).

If the massive Q4 charge was not enough, Boeing now sees 787-Related abnormal costs about $2B, above from the $1BN it had seen previously. The company said that it continues to perform rework on 787 in inventory and is focused on actions required to resume 787 deliveries.

Remarkably, as the following table from Boeing's earnings release shows, pretty much every Y/Y comparison is NM, which should tell you all you need to know about the company's headline financials.

And a prettier rendering:

Looking at revenue we get the following disappointing picture:

  • Commercial Airplanes revenue $4.75 billion, +0.5% y/y, missing estimates $5.50 billion
  • Defense, Space & Security revenue $5.86 billion, -14% y/y, missing estimate $6.85 billion
  • Global Services revenue $4.29 billion, +15% y/y, beating estimate $4.18 billion
  • Boeing Capital operating earnings $7 million, missing the estimate $24.4 million
  • Total commercial planes deliveries 99, +68% y/y, missing the estimate 102.36
  • Backlog $377 billion, +3.9% y/y

Adding insult to injury, the planemaker reported $5.5 billion in total costs to cover rising factory and customer expenses for the Dreamliner. Boeing took write-offs on the KC-46 aerial tanker and the global services division as well. As Bloomberg notes,
the 787 program’s profits have been wiped out as Boeing pays airlines for service they’ve lost because of delivery disruptions. The company hasn’t handed over any Dreamliners since June as it addresses structural imperfections on the roughly 100 aircraft in its system.

“This effort continues to impact our deliveries and our financial results -- but we are fully confident it is the right thing to do,” Calhoun’s memo said. “I view the financial impacts of this work as a long-term investment in a program that has significant runway ahead.”

It wasn't all bad news, however, as Boeing announced it is hiking the output of the 737 to 26 jets a month, up from 19 in October, Chief Executive Officer Dave Calhoun said in a note to employees. That was taken by the market as a sign the planemaker may be turning around its operations after burning through more than $31 billion during a nearly three-year-long slump marked by the Max’s grounding, the Covid-19 pandemic and a spate of quality lapses.

Looking ahead, Boeing said it still expects passenger traffic to return to 2019 levels in 2023 to 2024, and said that commercial recovery is broadening as regional dynamics continue to evolve driven by COVID-19. It also said says increasing 777/777X production rate to 3 per month in 2022.

But the biggest positive surprise was the company's announcement that in Q4, it generated $494 million in fourth-quarter free cash flow, up from a cash burn of over $4.2 billion a year ago; analysts had expected an outflow of about $1 billion.

This was the first positive FCF from Boeing since Q1 2019. It also meant that operating cash flow of $716 million as beat estimates of negative $429.0 million and was far above the negative $4.01 billion reported a year ago.

"2021 was a rebuilding year for us as we overcame hurdles and reached key milestones across our commercial, defense and services portfolios. We increased 737 MAX production and deliveries, and safely returned the 737 MAX to service in nearly all global markets. As the commercial market recovery gained traction, we also generated robust commercial orders, including record freighter sales. Demonstrating progress in our overall recovery, we also returned to generating positive cash flow in the fourth quarter," said David Calhoun, Boeing President and Chief Executive Officer.

"On the 787 program, we're progressing through a comprehensive effort to ensure every airplane in our production system conforms to our exacting specifications. While this continues to impact our near-term results, it is the right approach to building stability and predictability as demand returns for the long term. Across the enterprise, we remain focused on safety and quality as we deliver for our customers and invest in our people and in our sustainable future."

Also notably, the company which has been flirting with junk status for the past two years, managed to reduce its gross debt load again, even if its net debt remained unchanged as the entire reduction came at the expense of cash on hand.

Boeing shares ignored the latest huge 787 charge and operating loss and instead focused on the positive free cash flow and improvement in 737 MAX output, and rose 2% premarket. The shares gained 1.4% this year through Tuesday, while the Dow Jones Industrial Average dropped 5.6%.

Benchmark called Q4 a “kitchen sink” quarter, and noted that the Max production schedule was progressing, which is the main focus for analysts and investors. 

The company's Q4 investor presentation is below (pdf link)

Tyler Durden Wed, 01/26/2022 - 09:05

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