Asian markets rose on the news that Japan's Prime Minister, Abe, saw his party win elections this weekend and now controls both houses of the government. Abe is now the most powerful PM in recent memory and has the country behind him in his establishment of 'Abenomics'. If he is able to continue to implement his economic policies and they eventually turn around the Japanese economy, both America and Japan shall have leaders named Abe who go down in the history books as key figures in pushing them in the right direction. One should not forget how significant these reforms are for Japan and, although to a lesser degree, the rest of the world.
Also of significance today is further discussion of the SEC's case against Steven A. Cohen, the hedge fund manager who owns SAC Capital, and the charges he now faces. If the SEC is successful it will mean that Mr. Cohen will be unable to manage other people's money and will force a partial liquidation of his funds, although one should note that most of the funds under management are his own. This case has many watching it, and there will be further facts to come out as the crime Mr. Cohen is being charged with hinges on the outcome of cases for two of his former employees.
Chart of the Day:
Even with Abe's historic win in Japan many are concerned that with the most recent actions having little effect on the economy that the government may move to slow their transactions and therefore, inadvertently of course, slow the decline of the Yen in US Dollar terms and probably halt the rally in the Nikkei.
We have economic news due out today and it is as follows:
- Existing Home Sales (10:00 a.m. EST): 5.28 million
Asian markets finished higher today:
- All Ordinaries -- up 0.59%
- Shanghai Composite -- up 0.61%
- Nikkei 225 -- up 0.47%
- NZSE 50 -- up 0.35%
- Seoul Composite -- up 0.48%
In Europe, markets were trading mostly lower this morning:
- CAC 40 -- up 0.19%
- DAX -- down 0.04%
- FTSE 100 -- down 0.28%
- OSE -- down 0.13%
Two names we took a bit of heat from readers over reported results that were pretty disappointing last week. We took the weekend to look over those numbers to see if we could find something to get a little excited about, but as the analysts have already stated the past quarter for both Microsoft (MSFT) and Intuitive Surgical (ISRG) were pretty disappointing.
The shares found some support on Friday, but if we see a general market pullback, where does that then take the shares?
Source: Yahoo Finance
Investors really believed that Microsoft had turned the corner and shares were breaking out to multi-year highs as the bulls were laying out their case for why the company was a great buy. At the end of the day though we are left with a company still heavily dependent upon software programs it invented two decades ago to fund its ongoing attempts to break into new tech areas where others simply dominate. Yes their internet properties are doing better, but certainly are not profitable, and the Surface tablet was another expensive and embarrassing excursion. The only upcoming product we can get excited over is the next generation Xbox, and generally each one of those units loses money in the first year.
Intuitive Surgical also highlighted some of their problems which CNBC's Herb Greenberg has been highlighting for some time. First their growth rate has continued to slow, and this quarter it was so slow one seriously has to wonder if it is simply a one time disappointment or whether this is the new normal. Well if the reports about slowing hospital spending as well as insurance companies and administrators questioning the "overuse" of the machines on surgeries is any indication then it could be a bumpy ride from here on out.
These are two names we would be looking to exit right now (although we would hope readers were already out of these names from our earlier articles). There are better names in tech right now with real growth and profit margins which are holding strong.
We were quite curious Friday as we saw Biocryst Pharmaceuticals' (BCRX) shares rising on no news. It was quite peculiar that there was no news release, but with the flu in Asia and the company's Peramivir used to fight many of these aggressive strains we were willing to chalk it up to that. This morning however we noticed that the company filed an 8-K on Sunday and also announced that they completed the Phase I study of their drug BCX4161 and shall initiate a Phase II study in hereditary angioedema patients in 2013 per the company's news release (located here). This is a rare disease with only one person affected for every 10,000-50,000, a wide range for sure. The disease causes extreme pain in the abdomen and is accompanied by other severe symptoms.
This has always been a volatile name, but traders have always done well in it. Technically speaking, a move above the $2.50/share level would be bullish but not sure how much more news the company has which could fuel that move higher.
Source: Yahoo Finance
Speaking of hot biotechs, we want to once again visit some of the big caps in the sector. Friday was a good day for many of these names with Gilead Sciences (GILD) hitting new 52-week and all-time highs on the session after announcing that they would be releasing their latest quarterly results on Thursday, July 25, 2013. That makes this Thursday one of the biggest days of the quarter from the biotech sector as a slew of other large names will also be releasing results, with one of our favorite names in the sector, Celgene (CELG), among them. In the drug space these are the companies inventing tomorrow's medicines and the companies who are seeing the real organic growth in their businesses. As such we like to watch their results and suspect there will be plenty of fireworks on Thursday, for better or for worse.