As sales of blockbuster drug Acthar begins to crack Mallinckrodt (MNK) is in desperate need of a new narrative. Management is trying to sell investors on the idea that it can generate new products from its R&D pipeline. In the meantime it is also looking to diversify its revenue and earnings stream via acquisition. Last week Mallinckrodt announced the $1.2 billion acquisition of Sucampo Pharmaceuticals (SCMP). Sucampo’s primary product, Amitiza (lubiprostone), treats chronic idiopathic constipation (CIC) in adults, irritable bowel syndrome with constipation (IBS-C) in adult women and opioid-induced constipation (OIC) in adults suff...
With 2018 fast upon us, we can’t help but look back on the past 12 months, a year that was a whirlwind politically, socially, culturally, and economically. While the U.S. dealt with everything from natural disasters and gun violence to protests about racial inequality and the sexual harassment reckoning, the stock market reached extraordinary highs. The market hit 62 daily all-time highs in 2017, notes CNBC, and the S&P 500 has returned almost 20% so far. And, the top performing sector, technology, which is up around 38% year-to-date, surpassed the worst-performing sectors (energy and telecom) by over 43 percentage points. Even with th...
While there are many factors that determine option prices, stock option premiums move in unison with the underlying stock price. The most popular method for determining option value is the Black-Scholes Model. There are six factors in this model: Stock price is the most important factor in an options price as changes in stock price affect the price of options on the stock; Strike price has an affect on option price through intrinsic value, time value, delta and other factors; Time to expiration is the time remaining before an option expires. Due to time decay, option values can decrease at a faster rate when the option is closer to expiration...
The Canadian dollar is at an interesting juncture. Strong economic data has strengthened the currency but the Bank of Canada (BoC) has applied brakes on the currency’s rally. The Canadian dollar weakened in the wake of policy statements in October and December. The last word of 2017 went to the economic data as hot inflation numbers confirmed overhead resistance for USD/CAD at its 50 and 200-day moving averages (DMAs). USD/CAD closed out the year at a two month low and a lot of downward momentum. During a brief period of consolidation against the U.S. dollar, the Canadian dollar bounced between economic data and the Bank of Canada. USD/CAD ...
2017 has just ended so it is a good time to make predictions for 2018. However, the problem is that I do not make predictions – I have no crystal ball and no idea what will happen this year. The only thing I can do reliably is to look at the current state of a few financial markets and discuss the patterns they present. Let me apply this approach to the gold and silver markets. As usually, I am going to use the data delivered by the Commitments of Traders reports. Silver From the contrarian perspective silver looks very attractive. For example, Money Managers, big speculators trading silver futures, hold a net short position (the red ...
Did you know U.S. stocks rose in 2017? We didn’t. Because the “dishonest media” never talked about it. If you exclude every major financial news network and if you also don’t count CNN Money or Fox News or any other American media outlet, literally no one mentioned record high stock prices. We had no idea how U.S. stocks performed in 2017 until we word-searched Trump’s Twitter feed for “market” and “stocks” and “Dow”. He was the only person who mentioned stocks all year long. Obviously, we’re being sarcastic. Record high stock prices were front and center on every major news outlet in the country all year long despite ...
I spent a lot of time in the 2017 End of Year Special Edition looking back across 2017. I covered some of my best charts and market/macro calls of the year (and some of the worst!), along with my favorite charts, and a few other things. But this article provides a look at the most important part of that report. As interesting and sometimes even amusing as it is to look back in time, as investors we get paid for looking forward and anticipating what may come. In this respect there’s a few existing trends and themes that will remain front of mind for me and will be key to keep on your radar in 2018. Following is a selection of the k...
Early in 2017 I made a prediction. I knew all year long that we would see one analyst after another try to call a top in this bull market. I also knew every one of them were going to be wrong. A perma bear bias is a great way to sell newsletter subscriptions, but it is completely worthless market analysis. And just like I predicted, every other day we would see another analyst come out predicting a top. When we moved into the fall, the predictions for a September or October crash became deafening. In reality what happened was 2017 produced one of the best years in a long time. Folks, I’m going to let you in on a secret. Bear markets don’t...
It seems like every day another financial luminary declares the death of bitcoin… For example, in just the past few months: Former U.S. Federal Reserve Chair Alan Greenspan said bitcoin will ultimately “prove worthless.” Nobel Prize Winner Joseph Stiglitz said bitcoin “ought to be outlawed.” And billionaire investor Howard Marks said cryptocurrencies “aren’t real”. These talking heads all have one thing in common… They’re victims of the default bias Most people stick with what they know. They don’t conduct experiments in their life… whether it’s something small like trying a new brand of soda… or something bigger, ...
The tax bill recently signed by President Trump should be a boon to corporate America. The bill will drop the corporate tax rate from the current 35% to 21%. But energy companies, which have historically had a higher tax burden than other companies, stand to benefit the most. The Highest-Taxed Sector According to the corporate tax calculator at MarketWatch, the energy sector’s median tax rate for the past 11 years was 36.8%, far above the 30% average tax rate for all S&P 500 companies. Companies at the top of the list, like Marathon Oil Corporation (MRO) and ConocoPhillips (COP), pay taxes at a rate of nearly 50%. That’s primarily...