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Luongo: “What’s Coming Next Will Not Be Pretty”

Luongo: "What’s Coming Next Will Not Be Pretty"

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Luongo: "What's Coming Next Will Not Be Pretty" Tyler Durden Fri, 10/02/2020 - 16:21

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

While we were all distracted by the Kabuki Theater of the first ‘debate’ between Donald Trump and Joe Biden on Tuesday the bigger event was simply the turning of the calendar from September to October.

What is painful about so much market commentary is that it is focused on price. The Dow went up, huzzah! The dollar fell, huzzah?!

But prices are nothing without time. And most prices are meaningless. The only ones that truly matter are the ones we know definitively for any given period of time — Open, High, Low, Close.

Everything else is noise and errata.

So, the calendar shifting from September to October creates another opportunity to aggregate all the noise of two different time periods, one month and one quarter-year, and assess what people actually thought of the Dow or the dollar or Tesla or a micro-cap furniture company in Saigon.

Given the extreme political landscape, central bankers who have no answers and the obvious push for a remaking of society through the fear-mongering over COVID-19 this quarterly close may be one of the most important in the history of financial markets.

And the fight over important closing prices didn’t disappoint.

Last week I talked about what happens if the dollar really starts to rise, citing a massively bearish monthly chart pattern in the euro. To pull off one of the most bearish signals possible all the euro had to do was close below $1.1696 on Wednesday.

It didn’t. $1.1718 was the close. Bearish engulfing one-bar reversal avoided. Whew!

But for how long?

Germany slipped into deflation last quarter. The ECB can’t allow the euro to fall lest it begin putting upward pressure on rates as carry trades unwind. Right now the only thing keeping any of the markets afloat is insane levels of sovereign debt buying by central banks.

They are going through the motions that there are actual markets for these bonds and we are going through the motions that we actually want to own them.

If not for trillions in liquidity sloshing around looking for a home this whole system would collapse overnight. And yet there is no escape from it collapsing at some point anyway.

This is why the WEF’s Great Reset is happening. Those in power want to stay in power and remake the world in a different image. It’s becoming increasingly clear that COVID-19 is an excuse to introduce draconian lock downs to minimize the public’s outrage when they pull the plug on the current system.

Dividing the population into those that submit to this state of affairs and those who don’t was useful data for them. They now know how much push back they will get from the people and how many newly-minted brown shirts and Karens they will have to help them remake the world for the ‘common good.’

And whether anyone is aware of what is going on always shows up in the capital markets. The strong close by U.S. equity markets on Wednesday in the wake of Trump’s debate performance was your first clue.

As I noted in Wednesday’s post, “Elephants vote.”

Trump spoke to people’s elephants loudly and clearly amidst the calls from Chris Wallace and Joe Biden to, “Just shut up.” And those elephants realize that Trump is the only positive force in politics for the future of any vestige of capitalism.

Well, elephants also manage money.

And that’s why the subtle cues that happen in important markets after significant events are more important than 99% of all the price moves we see. It’s why obsessive ticker watching can easily lead you astray unless you are day-trading.

With the news that Donald Trump has COVID-19 and it’s not an asymptomatic post-hoc positive but rather a real diagnosis, the markets reacted badly to the news.

They want to believe there is a stimulus compromise coming from D.C. but as I’ve explained before, Pelosi and the Democrats work for the WEF and want the Great Reset to wipe us all out so they can remake the world and make it safe for their planned technocratic oligarchy.

But, the reality is that traders know this. That’s why the euro is weak today, stocks are closing the week with a whimper but U.S. markets look a helluva lot stronger than European ones.

Case in point. Here are the monthly charts for both the Dow Jones and the German DAX indexes.

The DAX is stuck below the 13,300 level and there is simply no appetite to take it higher. Look at the last four bars of the chart. It’s a strange pattern of higher highs and higher lows, which should be bullish but they are all, at the close, down bars — closing lower than the open.

That kind of non-committal action should be viewed as insider distribution rather than any kind of expression of strength. Powerful people trading the German markets are bailing on German stocks selling into the post-Coronapocalypse reaction rally high.

And they’ve been doing it for months.

Now, here’s the Dow Jones Industrials monthly chart. As Martin Armstrong routinely observes, the Dow is the best proxy for international capital movements into U.S. markets.

The Dow surged into the close on Wednesday (black arrow). It was the second-highest monthly close on record. That is remarkable given the state of the U.S. economy and the political desire to watch it burn.

Now I’m no fan of the larger bullhorn-like chart pattern stretching back four years and that signifies a potential crash in the future.

The differences between the DAX and the Dow Jones tell you that the smart people in Europe are moving their money out ahead of whatever is on the horizon.

But, right now, international equity markets are trading on the hope that Donald Trump wins re-election while the whole of the political class is expending every erg of capital they have to stop him and destroy the capital markets.

In spite of that, he is absolutely the odds-on favorite to win the election. Now whether or not he’ll be allowed to take office is a different story.

And the truth of it is all of what’s happening is their fault. They created this mess with moronic post-Keynesian economics, late-stage corporatist corruption and maleducating two generations into the believing Communism didn’t kill 200+ million people in the 20th century.

This is what undermined the structures built post-WWII as they’ve worked assiduously to weaken all social bonds, sow division and hide behind their minions in governments and the media.

Remember folks it’ll all be better when we embrace the Green New Deal Biden is confused about supporting and over throw everything good and decent in the world because there’s too much freedom in our first-world police states.

That’s the messaging of the Great Reset.

And if you don’t like what is planned well, they’ll be sending a bunch of UBI-sotted, fat-assed and tattooed BLM/Antifa thugs to your house to denounce you as racist while burning it down and taking your stuff while telling themselves their ‘fighting the power.’

What’s coming next will not be pretty regardless of Trump surviving COVID and getting re-elected. Deflation is here because it couldn’t be stopped. Now there is only oceans of money to print to throw into the abyss.

And that why there’s a plan in place and it will unfold because the people driving it have painted themselves into a corner if they want to retain power.

And they do at all costs.

*  *  *

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Four burning questions about the future of the $16.5B Novo-Catalent deal

To build or to buy? That’s a classic question for pharma boardrooms, and Novo Nordisk is going with both.
Beyond spending billions of dollars to expand…

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To build or to buy? That’s a classic question for pharma boardrooms, and Novo Nordisk is going with both.

Beyond spending billions of dollars to expand its own production capacity for its weight loss drugs, the Danish drugmaker said Monday it will pay $11 billion to acquire three manufacturing plants from Catalent. It’s part of a broader $16.5 billion deal with Novo Holdings, the investment arm of the pharma’s parent group, which agreed to acquire the contract manufacturer and take it private.

It’s a big deal for all parties, with potential ripple effects across the biotech ecosystem. Here’s a look at some of the most pressing questions to watch after Monday’s announcement.

Why did Novo do this?

Novo Holdings isn’t the most obvious buyer for Catalent, particularly after last year’s on-and-off M&A interest from the serial acquirer Danaher. But the deal could benefit both Novo Holdings and Novo Nordisk.

Novo Nordisk’s biggest challenge has been simply making enough of the weight loss drug Wegovy and diabetes therapy Ozempic. On last week’s earnings call, Novo Nordisk CEO Lars Fruergaard Jørgensen said the company isn’t constrained by capital in its efforts to boost manufacturing. Rather, the main challenge is the limited amount of capabilities out there, he said.

“Most pharmaceutical companies in the world would be shopping among the same manufacturers,” he said. “There’s not an unlimited amount of machinery and people to build it.”

While Novo was already one of Catalent’s major customers, the manufacturer has been hamstrung by its own balance sheet. With roughly $5 billion in debt on its books, it’s had to juggle paying down debt with sufficiently investing in its facilities. That’s been particularly challenging in keeping pace with soaring demand for GLP-1 drugs.

Novo, on the other hand, has the balance sheet to funnel as much money as needed into the plants in Italy, Belgium, and Indiana. It’s also struggled to make enough of its popular GLP-1 drugs to meet their soaring demand, with documented shortages of both Ozempic and Wegovy.

The impact won’t be immediate. The parties expect the deal to close near the end of 2024. Novo Nordisk said it expects the three new sites to “gradually increase Novo Nordisk’s filling capacity from 2026 and onwards.”

As for the rest of Catalent — nearly 50 other sites employing thousands of workers — Novo Holdings will take control. The group previously acquired Altasciences in 2021 and Ritedose in 2022, so the Catalent deal builds on a core investing interest in biopharma services, Novo Holdings CEO Kasim Kutay told Endpoints News.

Kasim Kutay

When asked about possible site closures or layoffs, Kutay said the team hasn’t thought about that.

“That’s not our track record. Our track record is to invest in quality businesses and help them grow,” he said. “There’s always stuff to do with any asset you own, but we haven’t bought this company to do some of the stuff you’re talking about.”

What does it mean for Catalent’s customers? 

Until the deal closes, Catalent will operate as a standalone business. After it closes, Novo Nordisk said it will honor its customer obligations at the three sites, a spokesperson said. But they didn’t answer a question about what happens when those contracts expire.

The wrinkle is the long-term future of the three plants that Novo Nordisk is paying for. Those sites don’t exclusively pump out Wegovy, but that could be the logical long-term aim for the Danish drugmaker.

The ideal scenario is that pricing and timelines remain the same for customers, said Nicole Paulk, CEO of the gene therapy startup Siren Biotechnology.

Nicole Paulk

“The name of the group that you’re going to send your check to is now going to be Novo Holdings instead of Catalent, but otherwise everything remains the same,” Paulk told Endpoints. “That’s the best-case scenario.”

In a worst case, Paulk said she feared the new owners could wind up closing sites or laying off Catalent groups. That could create some uncertainty for customers looking for a long-term manufacturing partner.

Are shareholders and regulators happy? 

The pandemic was a wild ride for Catalent’s stock, with shares surging from about $40 to $140 and then crashing back to earth. The $63.50 share price for the takeover is a happy ending depending on the investor.

On that point, the investing giant Elliott Investment Management is satisfied. Marc Steinberg, a partner at Elliott, called the agreement “an outstanding outcome” that “clearly maximizes value for Catalent stockholders” in a statement.

Elliott helped kick off a strategic review last August that culminated in the sale agreement. Compared to Catalent’s stock price before that review started, the deal pays a nearly 40% premium.

Alessandro Maselli

But this is hardly a victory lap for CEO Alessandro Maselli, who took over in July 2022 when Catalent’s stock price was north of $100. Novo’s takeover is a tacit acknowledgment that Maselli could never fully right the ship, as operational problems plagued the company throughout 2023 while it was limited by its debt.

Additional regulatory filings in the next few weeks could give insight into just how competitive the sale process was. William Blair analysts said they don’t expect a competing bidder “given the organic investments already being pursued at other leading CDMOs and the breadth and scale of Catalent’s operations.”

The Blair analysts also noted the companies likely “expect to spend some time educating relevant government agencies” about the deal, given the lengthy closing timeline. Given Novo Nordisk’s ascent — it’s now one of Europe’s most valuable companies — paired with the limited number of large contract manufacturers, antitrust regulators could be interested in taking a close look.

Are Catalent’s problems finally a thing of the past?

Catalent ran into a mix of financial and operational problems over the past year that played no small part in attracting the interest of an activist like Elliott.

Now with a deal in place, how quickly can Novo rectify those problems? Some of the challenges were driven by the demands of being a publicly traded company, like failing to meet investors’ revenue expectations or even filing earnings reports on time.

But Catalent also struggled with its business at times, with a range of manufacturing delays, inspection reports and occasionally writing down acquisitions that didn’t pan out. Novo’s deep pockets will go a long way to a turnaround, but only the future will tell if all these issues are fixed.

Kutay said his team is excited by the opportunity and was satisfied with the due diligence it did on the company.

“We believe we’re buying a strong company with a good management team and good prospects,” Kutay said. “If that wasn’t the case, I don’t think we’d be here.”

Amber Tong and Reynald Castañeda contributed reporting.

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Petrina Kamya, Ph.D., Head of AI Platforms at Insilico Medicine, presents at BIO CEO & Investor Conference

Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb….

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Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb. 26-27 at the New York Marriott Marquis in New York City. Dr. Kamya will speak as part of the panel “AI within Biopharma: Separating Value from Hype,” on Feb. 27, 1pm ET along with Michael Nally, CEO of Generate: Biomedicines and Liz Schwarzbach, PhD, CBO of BigHat Biosciences.

Credit: Insilico Medicine

Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb. 26-27 at the New York Marriott Marquis in New York City. Dr. Kamya will speak as part of the panel “AI within Biopharma: Separating Value from Hype,” on Feb. 27, 1pm ET along with Michael Nally, CEO of Generate: Biomedicines and Liz Schwarzbach, PhD, CBO of BigHat Biosciences.

The session will look at how the latest artificial intelligence (AI) tools – including generative AI and large language models – are currently being used to advance the discovery and design of new drugs, and which technologies are still in development. 

The BIO CEO & Investor Conference brings together over 1,000 attendees and more than 700 companies across industry and institutional investment to discuss the future investment landscape of biotechnology. Sessions focus on topics such as therapeutic advancements, market outlook, and policy priorities.

Insilico Medicine is a leading, clinical stage AI-driven drug discovery company that has raised over $400m in investments since it was founded in 2014. Dr. Kamya leads the development of the Company’s end-to-end generative AI platform, Pharma.AI from Insilico’s AI R&D Center in Montreal. Using modern machine learning techniques in the context of chemistry and biology, the platform has driven the discovery and design of 30+ new therapies, with five in clinical stages – for cancer, fibrosis, inflammatory bowel disease (IBD), and COVID-19. The Company’s lead drug, for the chronic, rare lung condition idiopathic pulmonary fibrosis, is the first AI-designed drug for an AI-discovered target to reach Phase II clinical trials with patients. Nine of the top 20 pharmaceutical companies have used Insilico’s AI platform to advance their programs, and the Company has a number of major strategic licensing deals around its AI-designed therapeutic assets, including with Sanofi, Exelixis and Menarini. 

 

About Insilico Medicine

Insilico Medicine, a global clinical stage biotechnology company powered by generative AI, is connecting biology, chemistry, and clinical trials analysis using next-generation AI systems. The company has developed AI platforms that utilize deep generative models, reinforcement learning, transformers, and other modern machine learning techniques for novel target discovery and the generation of novel molecular structures with desired properties. Insilico Medicine is developing breakthrough solutions to discover and develop innovative drugs for cancer, fibrosis, immunity, central nervous system diseases, infectious diseases, autoimmune diseases, and aging-related diseases. www.insilico.com 


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Another country is getting ready to launch a visa for digital nomads

Early reports are saying Japan will soon have a digital nomad visa for high-earning foreigners.

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Over the last decade, the explosion of remote work that came as a result of improved technology and the pandemic has allowed an increasing number of people to become digital nomads. 

When looked at more broadly as anyone not required to come into a fixed office but instead moves between different locations such as the home and the coffee shop, the latest estimate shows that there were more than 35 million such workers in the world by the end of 2023 while over half of those come from the United States.

Related: There is a new list of cities that are best for digital nomads

While remote work has also allowed many to move to cheaper places and travel around the world while still bringing in income, working outside of one's home country requires either dual citizenship or work authorization — the global shift toward remote work has pushed many countries to launch specific digital nomad visas to boost their economies and bring in new residents.

Japan is a very popular destination for U.S. tourists. 

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This popular vacation destination will soon have a nomad visa

Spain, Portugal, Indonesia, Malaysia, Costa Rica, Brazil, Latvia and Malta are some of the countries currently offering specific visas for foreigners who want to live there while bringing in income from abroad.

More Travel:

With the exception of a few, Asian countries generally have stricter immigration laws and were much slower to launch these types of visas that some of the countries with weaker economies had as far back as 2015. As first reported by the Japan Times, the country's Immigration Services Agency ended up making the leap toward a visa for those who can earn more than ¥10 million ($68,300 USD) with income from another country.

The Japanese government has not yet worked out the specifics of how long the visa will be valid for or how much it will cost — public comment on the proposal is being accepted throughout next week. 

That said, early reports say the visa will be shorter than the typical digital nomad option that allows foreigners to live in a country for several years. The visa will reportedly be valid for six months or slightly longer but still no more than a year — along with the ability to work, this allows some to stay beyond the 90-day tourist period typically afforded to those from countries with visa-free agreements.

'Not be given a residence card of residence certificate'

While one will be able to reapply for the visa after the time runs out, this can only be done by exiting the country and being away for six months before coming back again — becoming a permanent resident on the pathway to citizenship is an entirely different process with much more strict requirements.

"Those living in Japan with the digital nomad visa will not be given a residence card or a residence certificate, which provide access to certain government benefits," reports the news outlet. "The visa cannot be renewed and must be reapplied for, with this only possible six months after leaving the countr

The visa will reportedly start in March and also allow holders to bring their spouses and families with them. To start using the visa, holders will also need to purchase private health insurance from their home country while taxes on any money one earns will also need to be paid through one's home country.

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