Copper is known as a key indicator so the 9% three-day drop in copper prices for three-month delivery on the London Metal Exchange is worrying. On Wednesday, March 12, copper in London fell to its lowest price since July 2010 before rebounding slightly. In Shanghai the metal fell the maximum 5% allowed for a day.
But exactly what is copper indicating right now?
Most of the time, copper is an accurate indicator of fears and hopes about economic growth, especially economic growth in China. Demand for the metal closely tracks construction activity, for example. Part of the drop in copper is related to worry that China’s economy will slow below the 7.5% official target for economic growth in 2014.
But more of the current decline is related to worries about the Chinese financial system. Read more
Shares of biotech OncoGenex (OGXI) were up 8.9% today, March 10 at the close in New York.
Why? Because March 10 is the day before March 11. The company is scheduled to report fourth quarter results on March 11 after the close of the New York market and speculation today is that the company will announce major progress on the Phase 3 trial of custirsen, its drug for metastatic prostate cancer and for advanced non-small cell lung cancer. The company recently announced that the trial had reached the specified number of events required for final analysis and that the results would be reported as soon as they are available. The speculation is that “as soon as they are available” means before the end of March.
That’s a major change from 2013 when expectations were that the final results wouldn’t be released until the middle of 2014.
After hitting a low at $6.70 a share on November 6, 2013, shares of OncoGenex have climbed 107%. They are still 12.7% below the $15.71 March 14, 2012 price where I added OncoGenex to my Jubak’s Picks portfolio http://jubakpicks.com/the-jubak-picks/ . But I think we’re looking at news on custirsen and the company’s second cancer drug apatorsen in 2014 that will finally move the stock to my $22 target price.
The Phase 3 SYNERGY trial for custirsen is a big deal for OncoGenex since the drug represents a novel target for treating advanced prostate cancer. Read more
Today China’s onshore corporate bond market was hit with its first default—ever. Shanghai Chaori Solar Energy Science & Technology was unable to pay an 89.8 million yuan coupon due today on a bond issue.
It’s hard to make a case that the default of the Shenzhen-listed company rattled China’s financial markets. The Shanghai-Shenzhen 300 index closed a scant 0.24% lower today.
I think the default is a big deal–in the long-term. It inches China’s financial markets closer to pricing risk into stocks, bonds, investment trusts and other financial products. With a very few exceptions, China’s markets behave as if the government will bail out any company that gets in trouble and will make investors whole. An event like today’s default suggests that might not always be the case. And the default will blaze new pathways as China continues to develop legal processes for dealing with default and bankruptcy.
So if this default is important in the long run, why didn’t it have more effect on financial markets today? I think I understand the lack of a reaction. I also think it’s worth considering the possibility that markets are wrong. And that we’ll find test that conclusin later in 2014
There are three reasons, I think, for the lack of a market reaction today. Read more
There was enough good news in this morning’s February jobs numbers to keep alive hopes that the recent sluggishness in the U.S. economy is “only cold weather.”
But with the Standard & Poor’s 500 at new all-time highs this week, I’ve got to wonder how long the “I’ll gladly give you job growth tomorrow for another 1% advance in the stock market today” scenario can run.
At some point the economy needs to deliver something other than mediocre job growth.
In February net nonfarm payrolls added 175,000 jobs. That was above the consensus among economists surveyed by Briefing.com of 163,000 net new jobs for the month. The Labor Department also revised its estimate of job additions in January to 129,000 from the prior 113,000. The unemployment rate inched upwards to 6.7% from 6.6% as more workers searched for jobs.
The worst part of the monthly report was that the stronger than expected jobs number didn’t add more to wages in the month. Read more
Fourth quarter earnings and guidance for 2014 announced on January 22 make it clear that Abbott Laboratories (ABT) is a second half story for 2014. (Abbott Laboratories is a member of my Jubak’s Picks portfolio http://jubakpicks.com/the-jubak-picks/ )
For the quarter Abbott reported earnings of 58 cents a share, matching Wall Street estimates. Revenue climbed just 0.4% year over year to $5.66 billion, less than the $5.72 billion analysts had projected. A stronger dollar worked against Abbott in the quarter but even taking out currency effects worldwide sales still grew by just 3.3%.
For 2014 the company told Wall Street to expect $2.21 to $2.26 a share. That’s slightly ahead of the $2.21 consensus projection by analysts.
But that earnings guidance isn’t spread evenly over 2014. Read more