What do you get when you mix reopening optimism with stimulus hopes and throw in some good old "2019-style" US-China trade optimism? You get a session like overnight, where headed into what is usually an especially volatile quad-expiration day, at the curious time of 2:34am ET, or just before the European open, Bloomberg reported that with the Phase 1 trade deal largely forgotten, China planned to accelerate purchases of American farm goods to comply with the phase one trade deal with the U.S. following talks in Hawaii this week: "the world’s top soybean importer intends to step up buying of everything from soybeans to corn and ethanol after purchases fell behind due to coronavirus disruptions" Bloomberg reported citing sources, and that's all last year's trade war algos needed to push futures to overnight highs.
As a result of the report promising a "return" to the trade deal, which is laughably unachievable...
... but was enough to fool the algos, S&P index futures rose about 1% on Friday as investors also bet on a bounce back in post-pandemic economic activity, shrugging off the daily increase in new coronavirus infections in several states. Oil major Exxon Mobil rose 1.7% in premarket trading and Chevron gained 0.4% as Brent crude rose above $42 a barrel amid signs of gradual recovery in demand and oil producers’ promise to meet supply cuts. AMC Entertainment jumped 7.6% on plans to reopen theaters at about 450 locations in the United States next month and the company expects returning to full-seating capacity around Thanksgiving.
Meanwhile, on the virus front, on Thursday California, Florida and North Carolina imposed a mandatory mask use on Thursday as at least six states set daily records for new coronavirus cases. Mainland China also reported 32 new cases of infections, an uptick from a day earlier. Risk of a resurgence of the virus outbreak has led to choppy trading sessions this week, but the three main stock indexes are set to wrap up the week higher after a strong retail sales report for May and signs of additional official stimulus.
The S&P 500 ended marginally higher on Thursday while the Nasdaq posted its sixteenth rise in the past 19 sessions. The benchmark S&P 500 and the blue-chip Dow are now about 8% and 12% below their respective record closing highs hit in February, while the Nasdaq is about 0.5% below its all-time closing high on June 10.
In Europe, attention turned to negotiations over the EU’s proposed €750 billion program to help economies rebound from lockdowns, which sent the Stoxx 600 Index up as much as 1%. Wirecard AG shares bucked the trend, continuing their free-fall as the German payments company faced a potential cash crunch.
Attention will turn to the European Council summit of EU leaders, which will be taking place via videoconference from this morning. One of the main items on the agenda is the EU recovery fund, while there’ll also be discussions on the bloc’s long-term budget for the next 7 years. In terms of what to expect, hopes of a breakthrough on the recovery fund have been managed downwards recently, and the signs are instead pointing to an agreement no sooner than an as-yet unscheduled summit meeting in July. And with unanimity between the member states required for an agreement, the question will be how the so-called ‘Frugal Four’ of Sweden, the Netherlands, Denmark and Austria (all of which ran budget surpluses going into the pandemic) can move on board with the proposals. In an FT article on Tuesday, their four PMs said that they “support the creation of a time-limited emergency recovery fund”, so the question is whether they’ll be on board with grants as opposed to loans to the different member states. A negative outcome would be if there were a bunch of red lines or if we saw signs of reduced commitment to a large fund as the economic indicators recover. A more positive outcome would be if there were flexibility between the various positions.
Asian stocks also gained, led by energy and IT, after ending flat in the last session. Most markets in the region were up, with India's S&P BSE Sensex Index gaining 1.1% and Shanghai Composite rising 1%, while Singapore's Straits Times Index dropped 0.7%. Trading volume for MSCI Asia Pacific Index members was 18% above the monthly average for this time of the day. The Topix was little changed, with Management Solutions rising and Alpha Systems falling the most. The Shanghai Composite Index rose 1%, with Maoye Commercial Co Ltd and Hangzhou Jiebai Group posting the biggest advances.
While the overnight ramp has eased potential downside pressures somewhat, markets are expected to become more volatile during Friday’s session on account of quad witching, as investors unwind interests in futures and options contracts prior to expiration.
"Investors need to be prepared,” said Chris Gaffney, president of world markets at TIAA Bank. “When we see the run-up like we’ve seen and you have investors trying to protect their portfolios, protect the gains and having the uncertainty still out there, you’ve got some big options positions in the markets right now and the decisions to roll them or not on that day is what drives the volatility."
In FX, the Bloomberg dollar index slipped following news that China plans to accelerate purchases of American farm goods to comply with the phase one trade deal with the US,yet still headed for gains this week, supported by investors seeking haven currencies on rising concern that a second wave of coronavirus infections will delay a global economic recovery. G-10 currencies moved within tight ranges on Friday; the yen was little changed on the day but rose against almost all its major peers on the week amid a resurgence of the virus outbreak in Beijing and a jump in hospitalizations in some U.S. states. Mexico reported a record daily rise in cases in data released Thursday night.
In rates, Treasuries are lower led by long end, leaving 20- to 30-year yields cheaper by ~1bp vs Thursday’s close. Session lows were reached during Asia session as U.S. stock futures advanced. Market continues to show signs of fatigue with futures volumes still well below par.
In commodities, WTI and Brent future continues marching higher in early European trade as the complex was buoyed by overall risk appetite following reports that China will be stepping up purchase of US farms goods, whilst the contracts are also supported after yesterday’s JMMC meeting where Iraq and Kazakhstan submitted their proposals to compensate for overproduction, although the committee have delayed the press conference to next week as Nigeria and Angola have not yet submitted their compliance proposals.
Looking at the day ahead now, the main highlight will probably be the aforementioned European Council meeting. Otherwise, the data highlights include UK retail sales and public finance data for May, Germany’s PPI reading for May, along with April data on the Euro Area current account balance and Canadian retail sales. From central banks, the Russian central bank will be deciding on rates, while the Fed’s Powell, Quarles, Mester and Rosengren will be speaking. CarMax is reporting earnings.
- S&P 500 futures up 0.6% to 3,128.75
- STOXX Europe 600 up 0.5% to 365.27
- MXAP up 0.2% to 159.33
- MXAPJ up 0.5% to 513.91
- Nikkei up 0.6% to 22,478.79
- Topix down 0.02% to 1,582.80
- Hang Seng Index up 0.7% to 24,643.89
- Shanghai Composite up 1% to 2,967.63
- Sensex up 1% to 34,546.83
- Australia S&P/ASX 200 up 0.1% to 5,942.60
- Kospi up 0.4% to 2,141.32
- German 10Y yield rose 0.3 bps to -0.404%
- Euro up 0.1% to $1.1218
- Italian 10Y yield fell 3.6 bps to 1.251%
- Spanish 10Y yield unchanged at 0.516%
- Brent futures up 2.9% to $42.72/bbl
- Gold spot up 0.4% to $1,729.41
- U.S. Dollar Index little changed at 97.41
Top Overnight News
- European Central Bank President Christine Lagarde and German Chancellor Angela Merkel warned European Union leaders meeting Friday by video conference that if they fail to agree on a stimulus package the consequences could be dire
- China plans to accelerate purchases of American farm goods to comply with the phase one trade deal with the U.S. following talks in Hawaii this week
- U.K. government debt rose above 100% of gross domestic product in May for the first time since 1963, reflecting a precipitous drop in economic output and a surge in spending to counter the fallout from the coronavirus pandemic.
- Globally, companies are rushing to the bond market to raise more money than ever before.
Asian equity markets attempted to shrug-off Wall Street’s pre-quadruple witching indecision with a slightly upbeat tone seen in the region. ASX 200 (+0.1%) was higher with initial outperformance in Australia spearheaded by a surge in the consumer discretionary sector following a record jump in preliminary sales data, while advances in the Nikkei 225 (+0.5%) were limited by uninspiring currency moves and after early momentum was stalled by resistance around the 22550 level. Hang Seng (+0.7%) and Shanghai Comp. (+1.0%) were mixed amid the overall non-committal tone seen across global markets and as US-China frictions lingered with US President suggesting the US maintains the option of a complete decoupling from China and US Assistant Secretary of State Stilwell noted China’s attitude in Hawaii talks cannot be described as forthcoming and that the relationship between the sides is said to be tense overall, although the mainland indices remained afloat following the PBoC’s liquidity efforts in which it utilized both 7-day and 14-day reverse repos for a 2nd consecutive day. Finally, 10yr JGBs are flat with demand hampered as Japanese stocks remained afloat and amid the lack of BoJ presence in the market, although downside was also stemmed by a floor just above the 152.00 level.
Top Asian News
- Liquor Maker Moutai Briefly Becomes China’s Biggest Stock
- Yum China Is Said to File for $2 Billion Hong Kong Listing
- Reliance Says It’s Net-Debt Free After $15 Billion Jio Deals
- China’s $3.5 Trillion Wealth Product Market Suffers Losses
Stocks in Europe continue to gain ground on the final trading session of the week [Euro Stoxx 50 +1.3%] as the region mimic the positive APAC performance overnight – whilst sentiment was bolstered amid reports China will be accelerating its US ag purchases under the Phase One trade deal. As a reminder, today marks the Q2 quad witching (full schedule on the newsquawk headline feed), and thus the stock markets could see increased volume and volatility – with analysts at Goldman Sachs suggesting S&P 500 option expiries of almost USD 2bln in the pipeline. Back to Europe, major bourses see broad-based gains with UK’s FTSE (+1.2%) the marginal top performer on Sterling dynamics, having initially kicked the session off as a laggard. Sectors are in the green across the with clear outperformance in Energy amid as the sector benefits from the gains in the complex, whilst Material names see notable underperformance. The breakdown meanwhile provides little by way of a clear risk tone. In terms of individual movers, focus remains on Wirecard (-50%) as shares continue to erode having opened with losses deeper than 20% amid news Management Board Member Jan Marsalek has been suspended on a revocable basis, couple with reports of a rogue employee falsified documents which were related to Wirecard. Lufthansa (+1.2%) eased off best levels after pilot union VC stated the state aid package is needed for the Co’s survival, following reports that the aid envelop could be rolled back.
Top European News
- Lagarde Warns EU Leaders of Market Risks if No Stimulus Deal
- Investors Fear BOE Slowed Crisis Response Too Soon as Risks Loom
- A $21 Billion Debt Program in Denmark Has Bankers Confused
- Mask Maker GVS Surges in Milan Debut After $558 Million IPO
In FX, not quite the biggest G10 movers, but marginally divergent against the buoyant US Dollar as the DXY remains elevated near 97.500 after rebounding to a fresh mtd high on Thursday at 97.586. The Aussie is hovering just above 0.6870 in wake of a record rise in retail sales that almost reversed April’s steep decline and compensating for more angst between the nation and China amidst accusations over cyber-attacks. However, the Pound remains depressed despite UK consumption exceeding expectations in May, with Cable teetering on the 1.2400 handle and Eur/Gbp towards the upper end of a 0.9007-39 range as Government debt tops 100% of GDP for the first time since 1963.
- CHF/EUR/CAD/JPY/NZD - All rangy vs the Greenback, as the Franc continues to straddle 0.9600, while the Euro has tentatively reclaimed 1.1200+ status and may derive underlying support ahead of yesterday’s 1.1186 low given decent 1.1200-1.1195 option expiry interest (1.2 bn) in the run up to the post-EC Recovery Fund videoconference press statement (for more on this see our primer on the headline feed at 8.20BST). Elsewhere, the Loonie is gleaning traction within 1.3615-1.3569 parameters from a firmer rebound in crude prices awaiting Canadian retail sales data and the Yen is still relatively restrained either side of 107.00 as it maintains a tight inverse correlation with the Buck on risk factors offset against JGB-UST yield differentials/curve dynamics. Back down under, the Kiwi is lagging in the low 0.6400 zone and facing Aud/Nzd headwinds on the aforementioned modest Aussie outperformance as the cross trades near top of a 1.0700-1.0656 band.
- SCANDI/EM - Some support for the Nok, Rub and Mxn via the oil complex with WTI and Brent back over Usd 40 and approaching Usd 43/brl respectively, but the Rouble will be eyeing the CBR for rate guidance beyond the looming 100 bp cut anticipated and well telegraphed by the Governor before turning attention to May economic indicators at 11.30BST and 17.00BST respectively. Meanwhile, the Cnh is firmer and testing 7.0650 vs the Usd following reports that China has agreed to revert to Phase 1 trade deal compliant levels of US farm imports.
In commodities, WTI and Brent crude future continue marching higher in early European trade as the complex is buoyed by overall risk appetite following reports that China will be stepping up purchase of US farms goods, whilst the contracts are also supported after yesterday’s JMMC meeting where Iraq and Kazakhstan submitted their proposals to compensate for overproduction, although the committee have delayed the press conference to next week as Nigeria and Angola have not yet submitted their compliance proposals. That being said, Energy Intel stated that the mood at the JMMC wasn’t very positive according to delegates. News-flow has been light for the complex during European trade but traders will be eyeing further COVID-19, US-China or OPEC-related headlines. In the absence of that, the weekly Baker Hughes rig count rounds off the schedule. WTI July has reclaimed a USD 40/bbl handle (vs. low 38.75/bbl), whilst Brent August extended its footing over USD 42/bbl (vs. low 41.50/bbl) and currently eyes the next round number to the upside. Elsewhere, spot gold gained impetus early-doors as the DXY retreated in early trade, but the yellow metal has since waned off highs to stabilise around USD 1730/oz from a low of 1721/oz. Meanwhile, copper prices rise with the overall risk appetite and as copper front-month futures surpass the USD 2.6/lb mark to a current high of USD 2.6340/lb.
US Event Calendar
- 8:30am: Current Account Balance, est. $102.9b deficit, prior $109.8b deficit
DB's Jim Reid concludes the overnight wrap
There’s been an element of Groundhog Day about this week with the same themes looping over like a stuck radio station. It’s clear that the virus is still spreading in some important areas but at the same time the market’s technicals continue to be strong, especially with all the liquidity around.
In terms of the pandemic, the main news continues to be the possible Covid-19 resurgence in the US. California and Florida both registered their largest one day rise yesterday with 3649 and 3207 respectively. The rise in California amounts to a 2.2% pickup, higher than the 7 day average of 2%, but the state continues to have better figures under the surface with hospitilisations only rising by 0.5%. The Florida case rise corresponds to a 3.9% increase, above the previous 7-day average of 3%. In a reversal of sorts, NY Governor Cuomo floated an idea of a quarantine for all travelers from Florida. NY residents have been asked to self-quarantine for 14 days when traveling to Florida since early in the pandemic. In Texas, the number of hospitalisations rose for a 7th straight day, up by a further 5%, while cases rose by 3.6%, well above the 7-day average of 3.0%.
Outside of the US, Germany reported 908 new cases (up 0.5%), the largest one day rise since 19 May, though it is unknown whether this is related to the meat plant that we mentioned yesterday. Highlighting just how low German case growth has been over the last month, only 2 days (including yesterday) in the last 30 have seen cases rise more than 700 in a day. Elsewhere, daily increases in LatAm and India have been mired in the 3-4% range for weeks now. Thankfully these countries have registered lower recorded deaths per million of the population even if data recording may not be as thorough in all places. See the “view report” button for the global/main US states case and fatality tables.
The data releases out yesterday didn’t provide much optimism either, with the weekly initial jobless claims from the US (one of the most up-to-date pieces of high-frequency data we have right now) declining to 1.508m in the week ending June 13, well above the 1.290m reading expected. Though this was the 11th week in a row that the numbers have fallen, the decline of just -58k from the previous week is the smallest since the numbers peaked back in late March, posing a concerning sign that progress in the labour market could be slowing. Meanwhile the number of continuing claims in the week ending June 6 were also higher than expected, falling to 20.544m (vs. 19.850m expected), with the insured unemployment rate remaining at 14.1%, thanks to the previous week’s numbers being revised down by three-tenths. Overall, it paints a picture of rather slower improvements in the labour market than many hoped for after the unexpectedly good jobs report for May.
Against this backdrop of lingering virus concerns and ambivalent data, global equities continued to tread water in low volume markets. The S&P 500 just barely rose on the day (+0.06%), while the STOXX 600 in Europe fell by -0.71%. Tech stocks held up well though, with the NASDAQ managing to eke out a +0.33% advance. For the second day in a row S&P volumes were well below average, yesterday was nearly 25% below the last month’s daily average. This drops comes as options and futures contracts are set to expire today, in what is colloquially known as the “quadruple witching”. Elsewhere, sovereign bonds rallied for the most part as investors looked for safe havens, with yields on 10yr Treasuries falling by -3.0bp, as bunds (-1.5bps), OATs (-2.7bps), and BTPs (-3.7bps) also advanced. Meanwhile the dollar strengthened +0.27% to a 2-week high.
Today, attention will turn to the European Council summit of EU leaders, which will be taking place via videoconference from this morning. One of the main items on the agenda is the EU recovery fund, while there’ll also be discussions on the bloc’s long-term budget for the next 7 years. In terms of what to expect, hopes of a breakthrough on the recovery fund have been managed downwards recently, and the signs are instead pointing to an agreement no sooner than an as-yet unscheduled summit meeting in July. And with unanimity between the member states required for an agreement, the question will be how the so-called ‘Frugal Four’ of Sweden, the Netherlands, Denmark and Austria (all of which ran budget surpluses going into the pandemic) can move on board with the proposals. In an FT article on Tuesday, their four PMs said that they “support the creation of a time-limited emergency recovery fund”, so the question is whether they’ll be on board with grants as opposed to loans to the different member states. A negative outcome would be if there were a bunch of red lines or if we saw signs of reduced commitment to a large fund as the economic indicators recover. A more positive outcome would be if there were flexibility between the various positions.
Overnight it’s been another fairly uneventful session in Asia with newsflow fairly light. The Nikkei (+0.46%), Shanghai Comp (+0.39%) and ASX (+0.75%) have all posted gains – the latter boosted by strong retail sales numbers - while the Hang Seng (-0.07%) and Kospi (-0.37%) are flat to slightly down. S&P 500 futures have posted modest gains, while bond markets have been muted. The only other data this morning came from Japan where the May CPI print came at +0.1% yoy (vs. +0.2% yoy expected), core CPI printed at -0.2% yoy (vs. -0.1% yoy expected) and core-core CPI printed in line with expectations at +0.4% yoy.
Back to yesterday and here in the UK, the main news was that the Bank of England decided to expand their QE programme by a further £100bn, in line with consensus expectations. However, in contrast to sovereign debt in the rest of Europe, gilts sold off in the aftermath, with 10yr yields up +3.8bps as there were a number of hawkish takeaways from the decision. For starters, the BoE said that since liquidity conditions had stabilised, “purchases could now be conducted at a slower pace than during the earlier period of dysfunction.” There also wasn’t a discussion of negative rates at the meeting, while the Chief Economist Andy Haldane dissented from the majority and voted to keep QE unchanged. Nevertheless, downside risks to the growth outlook remain, and looking forward our UK economists think more action from the BoE might be needed to ensure financial conditions remain easy and gilt yields stable, not least as the post-Brexit transition period concludes at the end of the year. As a result, their view is that the chance of further easing – via more QE in Q4 – remains high.
In terms of yesterday’s other data, the Philadelphia Fed’s business outlook survey surprised to the upside, with the general business activity indicator rising to 27.5 (vs. -21.4 expected). Meanwhile the Conference Board’s leading economic index rose +2.8% in May (vs. +2.4% expected).
Before we look at what today will bring, we’ve just released a new podcast from the latest edition of Konzept (link here). The title is Online Grocery – Fad or fate? Before the pandemic, online food ordering (both grocery delivery and meal kits) was already seeing steady growth, but since the outbreak, it’s taken off. While some people may revert back to their old habits when the pandemic recedes, many have been introduced to the concept and will continue to enjoy the benefits. You can listen to the podcast here, and can also subscribe to Podzept on Spotify, Google and Apple Podcasts.
To the day ahead now, and the main highlight will probably be the aforementioned European Council meeting. Otherwise, the data highlights include UK retail sales and public finance data for May, Germany’s PPI reading for May, along with April data on the Euro Area current account balance and Canadian retail sales. From central banks, the Russian central bank will be deciding on rates, while the Fed’s Powell, Quarles, Mester and Rosengren will be speaking.
Gold as an investment; a long-term perspective
To many investors, gold was a disappointment during the COVID-19 pandemic and the high-inflation period that followed. Instead of protecting a portfolio…
To many investors, gold was a disappointment during the COVID-19 pandemic and the high-inflation period that followed. Instead of protecting a portfolio from inflation, the price of gold declined from its all-time high reached in 2020.
At the same time, inflation in the US and other advanced economies kept rising. Nowadays, inflation in the UK is expected to reach double-digit territory at the end of this year and runs at more than four decades high in the US.
Moreover, the news that a huge gold deposit was discovered in Uganda made many wonder what the point of investing in gold is if it isn’t so scarce. The new deposit has some 320,000 tonnes of extractable pure gold.
But time is on gold’s side. As an uncorrelated asset with the main financial markets, gold has its place in an investment portfolio.
Because of that, an analysis of the price of gold from a long-term perspective is useful as it helps filter the noise. After the bullish breakout in the early 2000s, the price of gold is in a bullish run, unlikely to end despite the recent underperformance.
Only bullish patterns followed the early 2000s bullish breakout
In the early 2000s, gold traded below $400/ounce. A bullish breakout led to several bullish patterns – including the current one, which may end up being bullish after all.
First, it was a pennant – a continuation pattern that was responsible for sending the gold price to $1000/ounce for the first time ever. What followed was an ascending triangle.
After the market had cleared the horizontal resistance given by the $1,000 level, it did not stop all the way to $1,900 in 2012. The move was reversed in the years to follow, but an inverse head and shoulders pattern propelled the price to a new all-time high in 2020, as uncertainty during the COVID-19 pandemic reigned on financial markets.
From that moment on, gold is in a consolidation area. Because it hesitated at horizontal resistance, one may argue that the price of gold forms an ascending triangle. The last time it did so, the market traveled more than $900, so bears might want to watch the current pattern closely.
Gold price’s resilience against the dollar has been impressive
Perhaps the best way to interpret the market is through the eyes of the US dollar. The gold price has been resilient against a rising US dollar, and the chart below shows it accurately.
From June 2020, the gold price did not move much, while the US dollar declined initially, only to recover the lost ground. Hence, gold’s price resilience in an environment of a rising US dollar adds strength to the yellow metal because a strong dollar limits the effects of inflation by offsetting the price of imports.
To sum up, gold is consolidating. A move to a new all-time high should trigger more strength, and a higher dollar might accompany it.us dollar pandemic covid-19 gold uk
How prepared is biopharma for the cyber doomsday?
One of the largest cyberattacks in history happened on a Friday, Eric Perakslis distinctly remembers.
Perakslis, who was head of Takeda’s R&D Data…
One of the largest cyberattacks in history happened on a Friday, Eric Perakslis distinctly remembers.
Perakslis, who was head of Takeda’s R&D Data Sciences Institute and visiting faculty at Harvard Medical School at the time, had spent that morning completing a review on cybersecurity for the British Medical Journal. Moments after he turned it in, he heard back from the editor: “Have you heard what’s going on right now?”
He had not. While he was knee deep in the review, a ransomware later known as WannaCry ripped through the globe at breakneck speed, descending on a quarter million computers in more than 150 countries. One of the hardest hit groups was the United Kingdom’s National Health Service, which saw tens of thousands of devices — computers, MRI scanners, blood-storage refrigerators and other equipment — compromised, bringing many hospitals to a standstill for several days. By the time the NHS sorted through the rampage, government officials estimated the attack had cost them £92 million, or $120 million, both in direct costs and lost output — including more than 10,000 canceled appointments.
For Perakslis, looking back, the coincidental timing was almost eerie. But having first called on the healthcare industry to take cyber threats seriously in 2014, Perakslis had already warned others something like this could happen.
“I wasn’t surprised at all,” he told Endpoints News. “It’s not validation. It’s just like … I hate to be right.”
Five years and a pandemic later, as the whole world got a crash course on battling a highly contagious virus, the issue of defending oneself against malicious, insidious cyberthreats appears to have quietly taken root in biopharma. It came largely thanks to a confluence of factors, from the new reality of remote work to realizations about how dangerous it could be when, say, the rollout of a lifesaving vaccine is compromised.
Even as some warn industry is woefully unprepared for coordinated attacks, in many ways, drug developers are heeding the call to pay serious attention.
“I actually think that most of the pharmas are getting there,” said Perakslis, who’s since moved to the chief science and digital officer role at Duke Clinical Research Institute. “Do I think they’re meeting the threat? No. But I think they’re doing a good job trying to get there.”
Multiple biopharma companies declined to comment, citing the fear of becoming a target. But experts offered advice on how to navigate the ever-evolving threats of cybersecurity, which can ripple well into the future, in an industry where security is tough in a connected ecosystem of universities, research centers, labs, patient groups and hospitals.
“We need to focus on really defining and explaining what we need to protect,” said Kathryn Millett, a researcher at the UK-based NGO Biosecu.re.
War, crime and others
In 2017, Merck fell victim to NotPetya, an attack instigated by the Russian government that affected multiple big companies. But the aftermath of the attack continued to generate new headlines in 2022.
A court ruled earlier this year in the pharma giant’s favor, deciding that it should be awarded $1.4 billion in insurance payout for the damages it suffered when the malware wiped out years of research, disrupted sales operations and crippled Gardasil 9 production facilities, forcing the company to dip into the US national stockpile.
Bob Maley, chief security officer at the cyber risk monitoring service firm Black Kite, describes it as a “watershed moment.”
It was useful not just in illuminating what could happen when a drugmaker gets swept up in a large-scale cyberattack, but in helping define what people mean when they talk about cyberthreats in the biopharma space. For one, NotPetya illustrated the difference between cybercrime, where the ultimate goal often is to extort money, and cyberwar, which is always meant to be destructive.
“Those things do happen, but I think that for most business purposes, that kind of event — there’s not much we can do about that,” Maley said, referring to NotPetya. “If those state actors decided they’re going to do something in a cyber warfare, they’re going to do it.”
Other, more mundane kinds of attacks, though, can be just as devastating. The potential consequences vary widely, as do the points or modes of attacks, straddling the precarious line between the corporeal and the digital.
The sheer range of possibilities for cyberattacks in life sciences led a group of researchers to propose the term “cyberbiosecurity” in 2017 “as a formal new enterprise which encompasses cybersecurity, cyber-physical security and biosecurity as applied to biological and biomedical-based systems.” Although that was credited by some for kicking off the conversation, Jean Peccoud, a synthetic biology researcher and professor at Colorado State University who co-authored that paper, noted it’s still a broad definition.
“This is a loosely defined field,” Peccoud said in an email to Endpoints.
Depending on who you are and what you are working on, the concerns could be vastly different. Peccoud himself, for instance, believes what’s unique to life science is the “dual representation of DNA sequence”: They exist as both molecules and as computer records, and translating or even transcending the two is increasingly convenient. That’s why for him, the scariest thing that could happen would be a biosecurity incident caused by an engineered organism, possibly with malicious DNA sequences designed in software, which could affect people’s health.
Some may be most worried about confidential data getting leaked; others may fear getting brought to a standstill when hackers lock down operations, demanding a ransom. For many, the nightmare scenario happens when attackers are lurking within company data, and no one knows about it — giving bad actors free reign to tamper with, to take an extreme example, the formula or quality control tests for a drug and thereby endangering patients.
“The state of play as it stands is that the problem of cyberbiosecurity itself is so large and nebulous that we cannot yet provide any clear messaging, guidance or solutions,” Millett of Biosecu.re said.
With bigger data…
While the threats of cyberattack are ubiquitous, security researchers, advocates and vendors have long warned that biopharma was a much greater target than other sectors.
“These industries offer an attractive target for cyberattacks because of their substantial investment in research and development, valuable intellectual property, connected IT and operational networks, and sensitive stores of data,” an MIT group wrote in 2018.
Emil Hewage is co-founder and CEO of BIOS Health, a Y Combinator-backed startup striving to personalize neural medicine through real time reading of patients’ neural code.
“In the discovery ecosystem we generate every week more data than that has been generated by public research efforts,” he said. “So we’re talking about many terabytes of brand new data sets per week.”
BIOS is but one player riding on a tidal wave of new discovery technologies generating data at unprecedented scale, which is often accompanied by the requisite analysis tools to interpret them. At the same time, research, development and manufacturing operations are all turning to more sophisticated technologies and data systems to measure and monitor performance on an ever-growing list of indicators.
“The growing emphasis on cybersecurity is occurring at the same time that the industry is arguably changing to one driven by data,” said Kelvin Lee, director of the Manufacturing USA National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL), in an email.
Biopharma companies are also somewhat unique in how they are entangled in a complex ecosystem of universities, research centers, labs, patient groups, hospitals and more. That’s not to mention regulators, who impose an additional layer of compliance requirements.
“It’s not just a matter of number of systems, but also number of integrations between those systems,” said Adin Stein, head of engineering operations, IT and cybersecurity at cell therapy developer Lyell.
Then there are more ways for hackers to target companies. Businesses in general have been using more devices and connecting them, exponentially expanding the number of what security folks call “attack surfaces.”
“This is more data to lose or more subtle ways for that to be extracted and exhibited privily now,” Hewage said.
Perakslis and Peccoud also both point to a concept in the cyber space known as asymmetry: For any corporation, cybersecurity is a cost that executives try to minimize. Hackers, on the other hand, stand to gain immensely from an attack, and one person can theoretically take down an entire company (even though they usually work in groups these days).
The good thing about general problems is that general solutions exist, such as employee training and cyber hygiene.
At Black Kite, Maley said his team has gone through a long list of recommended cyber practices to try and predict which companies are most at risk of becoming victims of ransomware.
“What we found was that the bad actors, out of all those hundreds of things that could be exploited, they were only exploiting a very small subset,” he said. “What’s shocking to me is so few things that a company could do to reduce their likelihood of being a victim, for some reason, they just don’t do.”
They include patching the systems on old servers to get rid of vulnerabilities, configuring emails so that it’s harder for hackers to send phishing emails, mandating multi-factor authentication and asking employees not to use the same passwords for everything — lest their login information end up on the dark web and become easy keys for hackers in attacks dubbed credential stuffing.
“Basic, basic, basic kind of things,” Perakslis said. “It doesn’t protect you from the really hard stuff. But again, it’s like driving without a seat belt, you know. Seat belts are not going to keep you out of an accident. But it’s dumb if you get into an accident, you didn’t have one on.”
When Kathryn Millett at Biosecu.re first conducted a pilot survey of biotech and cybersecurity leaders, all respondents agreed that cyberbiosecurity risks posed a “real and current threat.” In a follow-up survey that’s still ongoing, she’s heartened to find that the awareness has “trickled down to lab practitioner level.”
“I think there’s been enough sort of news out there, you know, and enough big stories that biotech is really taking notice, and recognizing that there’s a lot at stake and they don’t want to be part of that story,” Stein, the Lyell exec, observed.
Even if biopharma companies don’t go around boasting about it, plenty of signs point to a greater emphasis on cybersecurity. Big Pharma is increasingly bringing chief information officers into the executive suite when in the past they might have reported to the CFO. By Perakslis’ count, budgets are also increasing.
A report by cybersecurity solution provider Fortinet last year found that 98% of pharmaceutical companies surveyed “experienced at least one intrusion,” and around half of them saw between three and five intrusions. But importantly, business-critical data or intellectual property were among the least impacted.
“With the uptick of these intrusions in general, companies have likely gotten better about protecting business-critical data, but that’s not to say cyberattacks targeting these pharmaceutical organizations are not serious, but it is possible that data is better segmented to prevent cascading impact if an intrusion happens,” said Troy Ament, Fortinet’s chief information security officer.
Lee, the NIIMBL director and University of Delaware professor, noted that while the leading pharma companies are sophisticated in the space, performance is also uneven.
“Smaller companies in the field that have just a few years of experience usually do not have strong cybersecurity protocols or the funding to invest in third-party analysis and compliance services,” Alex Zhavoronkov, co-CEO of the AI drug discovery company Insilico, wrote to Endpoints. “This sometimes worries me a lot.”
At companies that do allocate enough resources, cybersecurity often consists of three pillars: cutting-edge technology that cements every system update patching vulnerabilities; outside experts who provide intelligence and an assessment of risk levels; and a framework to integrate the handling of cyberattacks into the rest of the risk management system.
“One of the best cybersecurity strategies starts with assuming you’ve already been hacked because what happens when you’re hacked, you’re going to look for data that’s leaving,” Perakslis said, and he noted companies are getting better about using real time threat surveillance data to identify and jump on issues.
Biopharma could also learn from other industries, Maley said, learning from case studies such as the breach experienced by Colonial Pipeline, where a mix of exposed remote access ports and credential stuffing led to catastrophe.
For smaller players, Hewage noted, it’s best to start thinking about cybersecurity before they lay their hands on sensitive data. Alternatively, Zhavoronkov noted Insilico decided to lower the risk by minimizing the amount of patient data its platform relies on — while carefully following compliance protocols demanded by Big Pharma partners and engaging providers to perform stress tests.
“I think as you think about particularly emerging biotech, one of the key lessons that I’ve picked up on through the community is the idea of security by design,” Stein said. “It is easier to put a security program in place and develop a culture of security than it is to go back and retrofit.”
Still, no defense is permanent.
“While the industry has certainly taken notice, being on alert never ends,” Ament said.
Culture of secrecy
After a cyberattack, biopharma companies are reluctant to share what happened with other drugmakers, losing what could be teaching moments. Maley said what to disclose has been an issue even going back to a 2006 cybersecurity conference that he attended.
“We’re still talking about it 16 years later,” he said.
To this day, Merck has kept public statements about the NotPetya attack to a minimum. And while others, from Dr. Reddy’s to Roche to Bayer to more recently Novartis, have reported cyber intrusions, they often don’t offer any details beyond whether any sensitive data were compromised.
There are legitimate reasons for staying mum, Perakslis said: “One of the important reasons is that you would never give an adversary your playbook.”
There are also few laws requiring disclosure, while board members do have a fiduciary responsibility to shareholders — which often means to limit bad press.
“I think most companies when they experience these things, one of the first questions that management asks is, well, who do we have to tell? Not who should we tell,” Maley said.
But conversations do happen, Stein said, where specifics are kept confidential and lessons are shared, whether through speaking engagements at conferences, consulting vendors or contributing to the creation of industry standards.
“I wouldn’t assume that if you’re not hearing from a particular organization, they’re not contributing very heavily to quite complex discourse,” said BIOS CEO Hewage. “And in some senses, it’s best to trust really heavily peer reviewed and vetted, industry wide conversation.”
Government agencies can sometimes play that middleman role. The US Department of Homeland Security, for instance, has established Information Sharing and Analysis Centers for early information sharing; the Department of Health and Human Services set up the Health Sector Cybersecurity Coordination Center to do something similar and alert stakeholders to threats; and the UK is also reviewing its biosecurity strategy.
That said, it is nearly impossible to truly tell how prepared a certain company is against cyberattacks — and even with options for sharing, companies tend to be selective about what they say. As a pharma insider told Endpoints, “There’s no prize for naiveté.”
Finding a balance
Even those who are most steeped in cyberbiosecurity advocacy tend to acknowledge that cybersecurity cannot, and should not, be the sole focus of biopharma companies. Their stated mission, after all, is to develop new vaccines and treatments for diseases.
With all the other projects, plans and needs vying for attention, Perakslis said it’s all a matter of prioritization and resource allocation — thinking through how much money to spend on things that are likely but low impact, versus those that are unlikely but high impact.
Understanding the risks and impact thoroughly, then, becomes key.
Finding reference in other areas, Peccoud noted that the aviation industry has an incident reporting system that’s essential to develop its safety culture. Voluntary reporting is shielded from prosecution, which, along with the National Transportation Safety Board, provides material that can be discussed in training or to develop regulation.
“Without transparency the bad guys will always have the edge,” he said.vaccine therapy dna pandemic uk
Five things you can do to help you have a more positive birth experience
Becoming a parent can be nerve-wracking – but there are many things you can do to feel more in control.
Whether you’re a first time parent or have had children before, you’re probably willing to try anything to ensure you have the most positive birth experience you can. After all, the kind of birth experience you have can not only affect your own mental health, but can have an affect on parent-child bonding, as well as partner-to-partner relationships for years after giving birth.
It can be confusing to know what to expect or where to turn to for advice, especially as maternity services have changed due to falling staff numbers and the continued impact of COVID-19. But here are a few things you can do yourself as you navigate your maternity care, which may help you have a more positive birth experience:
1. Get educated
Studies have shown that signing up for antenatal classes can help reduce fear, depression and anxiety – both during pregnancy and after birth.
Typically, antenatal classes will help you understand what’s happening to your body during pregnancy and explain the birth process. They may also teach you coping strategies to help relax during labour, alongside guidance on caring for your new baby. Antenatal classes can also be a great way of meeting other parents going through the same thing as you.
Another option is creating a personalised care and support plan, which is offered by most NHS trusts in the UK. This is a tool you can use with your care providers to explore what’s important to you – and discuss what your range of options are, such as your preferred place of birth, or whether you prefer skin-to-skin contact with your baby immediately after birth.
Understanding what your body’s going through, and making a personalised plan for your birth, may help you feel more prepared and less anxious about what to expect.
2. Know your carers
Being cared for by one nominated midwife, or being assigned to a team of familiar midwives, is shown to be associated with better outcomes for you and your baby – including decreased chance of having a premature labour and lower likelihood of needing interventions (such as birth with the help of forceps). You’re also more likely to be satisfied with your overall experience.
When an allocated midwife is not an option this makes choosing the right birth partners crucial. They can not only offer you reassurance, encouragement and support but can be your advocate, help you try different positions in labour and help provide you with snacks and drinks. Most typically these would be trusted loved ones. But be aware that research shows birth partners may also feel anxious or overwhelmed at taking on this role, and may struggle with seeing a loved one in pain – so it’s important to be realistic about your expectations, and choose the right person. It may be the best birth partner for you is a close friend or relative.
3. Challenge care recommendations if you aren’t happy
There are likely to be many other options available to you – such as where you might give birth, or how you want to be cared for during labour.
During antenatal appointments be sure to pause, think and ask about benefits, risks and alternatives to the care being proposed. Research shows how important choice and personalised care are for expectant parents who want their voices and preferences to be acknowledged, and to receive consistent advice.
If you have concerns over a suggestion your care providers have made or have questions, don’t be afraid to ask. Take your birth partner with you if you prefer, who can empower you to ensure your voice is heard. After all, care providers are duty bound to ensure you make fully informed choices.
4. Don’t always listen to your friends and family
Once people hear you have a baby on the way it seems everyone feels the need, without asking, to tell you the full (and often graphic) details of their own children’s birth.
But it’s perfectly acceptable to politely change the subject if you don’t want to listen, or if hearing these stories makes you nervous or worry. It’s also worth remembering that each person has a different labour and birth, even with their own children – so what was true for someone else is likely not to be the same for you. While it can be helpful for some people to debrief after the birth, it’s okay to avoid hearing this yourself if it makes your nervous, and maybe suggest they speak with a professional about their experience instead of telling you.
5. Visit your preferred place of birth
Many maternity units are now opening up their doors again to tours and informal visits – and those that aren’t are doing this virtually.
Becoming familiar with where you might give birth – even down to where you might park on the day – can help you feel more confident about giving birth. It may also remove some of the unknown, helping you regain a sense of control – which in itself is linked to a more positive birth experience.
For those planning a homebirth, speak to your midwife about how you can improve your space to facilitate the most safe and positive experience. For one of the most important days of your life, visualising where this will take place ahead of time can help you feel more confident and in control.
Ultimately, it’s important to remember that no one can predict exactly how your labour and birth journey will go. Even after heeding the above steps – there’s always a chance you may need to consider a plan B, C or even D. But no matter what, remember you’ve done your very best, and you’re not likely to repeat this exact experience the next time.
Claire Parker does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.depression covid-19 uk
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