To gain an edge, this is what you need to know today.
The Folly Of Investor Celebration
Note the following:
- The chart shows when The Arora Report predicted that a record supply of Treasuries was ahead. A record supply meant higher yields and lower bond prices.
- With the benefit of hindsight, The Arora Report prediction has proven spot on.
- The chart shows that since the Arora call, there has been a significant drop in bond prices.
- The chart shows that bonds are consolidating significantly below the lower resistance zone.
- We shared with you in yesterday’s Afternoon Capsule:
The announcement from the U.S. Treasury is adding to the buying pressure in stocks. Here are the details of the Treasury announcement:
- From October to December, the Treasury will borrow $776B. In The Arora Report analysis, this amount is $76B less than the consensus.
- From January to March, the Treasury will borrow $816B.
- That is $1.592T of borrowing over six months. Investors are celebrating by buying stocks. What is wrong with this picture? Celebrating this level of borrowing is a folly.
- The second part of the Treasury announcement is still ahead. In the Treasury’s issuance announcement, the Treasury will provide details of the duration of the notes and bonds it will be selling.
- Details of the issuance have the potential to move the yields, and in return bonds, by a large amount. If more issuance is of long duration, long term yields will rise. If most of the issuance is in the short term, the impact is uncertain.
- In The Arora Report analysis, the Treasury issuance statement is of utmost importance to stock investors. If yields rise further on long term bonds, this will be a negative for the stock market. On the other hand, if yields fall, it will be a positive for the stock market.
- The FOMC meeting starts today. The FOMC decision will be announced at 2:00pm ET tomorrow followed by Powell’s press conference at 2:30 pm ET.
- In The Arora Report analysis, Treasury issuance announcement is more important for investors than the Fed decision.
- Tesla Inc (NASDAQ: TSLA) is an important stock for the sentiment in the stock market. As of this writing, TSLA stock is trading below $200. The reason for the drop is two fold:
- ON Semiconductor Corp (NASDAQ: ON), a supplier of silicon carbide chips for ...
Longtime cancer R&D chief Peter Lebowitz is taking his final bows at J&J oncology. Now what?
As the head of Johnson & Johnson’s oncology R&D, Peter Lebowitz’s portfolio ran the scientific gamut, from discovery through development and…
As the head of Johnson & Johnson’s oncology R&D, Peter Lebowitz’s portfolio ran the scientific gamut, from discovery through development and on to the big combos and post-approval studies that grow major drug franchises in the cancer arena.
The sheer scope of his career, running more than 11 years as oncology chief, put him in the driver’s seat for a range of big drugs like Darzalex, a fast-growing multiple myeloma blockbuster which underpins the entire commercial aspirations of a global pharma giant that is doubling down on its pipeline as the engine of revenue growth.
And now it’s time for something new — though we don’t know exactly how the next chapter of Lebowitz’s career is being planned.
J&J turned to LinkedIn on Monday to say its farewells to Lebowitz, who will be playing out his career at the multinational until the end of the year. At that point, he’ll be a free agent, and Yusri Elsayed will officially step into the top post. Elsayed is another longtime J&J vet with 18 years at the company and close to 11 years steering the hematology group, following the same path up the corporate R&D ladder that Lebowitz took at J&J.
Lebowitz does not stick to the old playbook.
He was running the oncology group when J&J stunned the industry with a major alliance with China’s Legend at a time rivals to the still little-known Chinese company were downplaying what turned out to be a great run of data for Carvykti that would steer it out front in the CAR-T field. More recently, that has meant more advanced studies that, in Lebowitz’s words, “get to the point that, hopefully, we start seeing things that look like cures.”
And he’s played a leading role in building franchises like Rybrevant with a recent Phase III combo win in NSCLC with chemo that could put some heat on AstraZeneca’s blockbuster Tagrisso.
In Big Pharma, the traditional course for cancer drug development revolves around finding a heavily pre-treated niche you can dominate, and then gradually advancing approvals and combos on a path to major league status. And if it requires a partnership with a biotech to jump into a foot race to the FDA, Lebowitz’s team has been known to offer decisive upfronts, including the $245 million for another low-profile China player called CBMG last spring.
Add it all up on the Lebowitz résumé, and it comes out at 14 new drug approvals since 2011, along with a dozen “breakthrough” tags from the FDA and a string of major publications at the New England Journal of Medicine that top out at 38 — unusual for a career posting that often doesn’t last more than a few years in an R&D world where change is a constant.
I asked for an interview, but like a lot of the major players, that isn’t J&J’s style — so we’ll have to wait a bit to hear more about Lebowitz’s future.
As always, J&J is billing this as a “retirement.” But the magna cum laude Harvard grad with a master’s from Oxford and MD/PhD out of Penn (Duke postgrad), will have some options as he starts 2024.fda china
NZ dollar slips on weak Chinese data, jobs data next
Chinese PMIs decelerate New Zealand labour market expected to cool The New Zealand dollar has extended its losses on Tuesday. In the North American session,…
- Chinese PMIs decelerate
- New Zealand labour market expected to cool
The New Zealand dollar has extended its losses on Tuesday. In the North American session, NZD/USD is trading at 0.5808, down 0.60%.
October hasn’t been kind to the New Zealand dollar, which has declined by 3%. Last week NZD/USD dropped as low as 0.5772, its lowest level in a year.
New Zealand jobs employment expected to ease
New Zealand’s labour market is expected to cool in the third quarter, as elevated interest rates continue to dampen economic activity. Employment is expected to ease to 0.4% q/q, compared to 1.0% in the second quarter. The current unemployment rate of 3.6%, which was the highest since Q2 of 2021, is expected to rise to 3.9% in the third quarter.
China is New Zealand’s largest trading partner and the significant slowdown in the Chinese economy is having a dampening effect on the New Zealand economy. On Tuesday, Chinese PMIs softened in October. The Manufacturing PMI slipped from 50.2 to 49.5, missing the market consensus of 50.2. The Non-Manufacturing PMI, which covers services and construction, weakened to 50.6, down from 51.7 in September and shy of the market consensus of 51.8. A reading above 50 indicates expansion and below 50 signals contraction.
The data indicates that the world’s number two economy is still struggling to recover after removing harsh Covid-19 controls at the start of the year. China has responded with increased stimulus but more needs to be done as global demand for Chinese exports has waned and the property sector remains on shaky ground. Beijing is likely to continue lowering interest rates and increasing government spending in order to stimulate the economy.
- NZD/USD is testing resistance at 0.5819. The next resistance line is 0.5864
- There is support at 0.5765 and 0.5720
Key investor highlights the ‘magic’ of Apple headed into Q4 earnings
Apple, the biggest company by market cap in the world, will report earnings Thursday.
Just days before it will report quarterly results, Apple (AAPL) - Get Free Report launched a slew of new products in a Monday night event the company dubbed "Scary Fast." The event focused on the reveal of Apple's new Mac lineup, simultaneously showcasing the company's next-generation computer chips.
This next generation of chips, called the "M3 family," features what Apple refers to as "industry-leading 3-nanometer technology" and faster, more efficient GPUs, the kind of computer chip used to power artificial intelligence.
The company additionally said that the new MacBooks take advantage of a litany of entirely recycled materials.
The new lineup ranges in cost from $1,599 for a standard 14-inch MacBook Pro with an M3 chip, to $4,000 for the 16-inch Pro, loaded up with a terabyte of storage, the M3 Max and 48 gigabytes of RAM.
DeepWater Management's Gene Munster, likening the unusual prime-time event to the drama inherent to many of Elon Musk's Tesla (TSLA) - Get Free Report events, said that the important takeaway from the event centers around the new chip lineup, which features that combination of CPU and GPU cores.
"What jumps out to me is the Max chip can be used for AI developers," Munster wrote. "That said, Nvidia (NVDA) - Get Free Report GPU chips are still better geared for model training and sold as standalone. You have to buy a Mac to get the M3 Max. Apple's and oranges."
Though the company dropped the price of its 14-inch MacBook Pro with the M3 chip to $1,599 from $1,999, Munster noted that Apple also dropped the 13.3-inch MacBook from the lineup. That computer, at $1,299, was considered the entry-level Mac.
Now, Munster said, the entry-level Mac runs several hundred dollars higher.
"That's the magic of Apple, setting the table to get consumers to stretch to higher priced products," Munster wrote.
To Munster, the bottom line of the event is that it should give a boost to Mac sales growth for the December quarter.
And with Apple set to report Q4 earnings on Thursday — in which analysts are expecting to see earnings of $1.39 per share and revenue of around $90 billion — Munster said that the big pressure point for the stock is demand and diversification in China.
Shares of Apple, up around 30% for the year, dipped slightly Tuesday.
"Apple's brand reach is next level," Munster added. "About 9.2m people watched the first game of the World Series. Compare that to about 4.2m people that watched Apple's Scary Fast Event on Youtube."
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