Retail Sales Rising
The parallel TV performances by Donald Trump and Joe Biden last night caused us to channel switch but mainly to listen to the president, who was sweating and angry whereas the former veep was cool and mostly prepared. The main feature of the Trump show was his constant lies and misstatements about his handling of the COVID-19 crisis. His nose did not grow, despite my waiting for a Pinocchio moment. He seems to be incapable of noticing how well the public already knows his past positions.
Trump again failed to distance himself from QAnon terrorists (as defined by the FBI), merely noting that they are against pedophiles. So am I.
I suspect my views are not widely shared. Trump is also hinting that if re-elected he will drop two of his cabinet members, Attorney-General Bill Barr and Treasury Secy Steven Mnuchin.
Biden dodged one matter if he would “pack the court” if he wins the election. I suspect he would because he is channeling the ghost of FDR in other matters.
We close the week with what may be an upwardly mobile market at last thanks to retail sales rising and hopes for a quickie COVID jab as soon as next month from Pfizer and BioNTech. But we have 2 company reports and a report by a Swedish-speaker on another share we own, so enough about the 2020 election.
Oilpatch
*Schlumberger Ltd of the Dutch Antilles reported before the opening today and while its non-GAAP Q3 earnings (excluding charges and credits) beat consensus by 3¢ cents at 16¢, its 38% lower sales than last year at $5.26 bn (and 2% lower than Q2) and negative outlook forecast took the SLB share down 8% at the opening today. Its worst performance came in North America where it spent a lot of money on acquisitions like Cameron and where drilling is down sharply. Its diluted EPS was up from a mere nickel in Q2. Its best business line was production which grew sequentially by 12% as more wells went live. Ecuador drilling boosted Latin America revenues by 30% from Q2 to $707 mn but the rest of the world saw decreases.
CEO Olivier Le Peuch stated that its execution capabilities are rising while cost of capital is being reduced by $1.5 bn with tech innovations. It is lowering its North America holdings with two sales. One is of OneStim pumping in return for a 37% stake in Liberty Oilfield Services. It is also selling its fracturing sand business.
This will boost international sales to 65% of the total. He said that the trough for the oil and gas exploration business will come in the next 2 quarters, partly for seasonal reasons, and partly from COVID-19 lockdowns. If all goes well, robust free cash flow will follow next spring. Cross your fingers.
SLB also is aiming to reduce its own and its customers' “environmental impact and contribute to the future sustainable energy mix,” according to M. Le Peuch. SLB set a quarterly dividend of 12.5¢/sh.
Pharma
*Swiss Roche reported on Q3 yesterday and missed sales expectations because of competition from biosimilars for its bestsellers like Tecentrique, Ocrevus, Perjeta, and Hemlibra. For some reason this major drug result was not reported by the combined forces of TDAmeritrade and Schwab as it is traded OTC in the USA.
RHHBY it expects Q4 to gain from diagnostics demand over COVID-19 and a rollout of new bestseller drugs. RHHBY tried to get people to focus on the 9 mo rather than Q3 results which were less awful. This year total sales fell 8% in Swiss francs to CHF 43.979 bn and US sales (its largest market) were off 1.9% at CHF 18.389 bn. Europe was flat.
Roche won some notoriety when its partner Regeneron did a viral load study to measure antibodies to COVID-19 in patients with a high viral load. Among them was Pres. Trump who was treated with it.
In the last quarter, Roche got US approval for its Enspryng to treat rare disease neuromyelitis optica spectrum disorder; Tecentrique+ Cotellic in Europe; non-small cell lung cancer drugs Rozlytrek and Evrisdi for spinal muscular atrophy. Its new meds portfolio is up 40% YTD and will rise even more going forward if Venclexta gets approved (a produce made together with Advil which will share in the profits.) and if Kadcyla takes off for Her2 cancers. It has a combo drug coming for antgiogenesis of the retina. It just launched Gazyva for lupus in Q4. It is working with a new partner, Blueprint Medicinces on Gavreto, also coming to the world markets including ours, but not to China. (Read on for why.)
Overall it has 4 new products this year despite the drag from coronavirus.
A hot area was diagnostics where sales rose even in francs to CHF9.662 mn and 18% in dollars.It also is gaining from assays to assess which patients will benefit from drugs like Actembra and Herceptin and other assays on immunity and antigens going forward like Esbriet and Xolair.
China is an enigma with sales growing every quarter this year but down overall from last. This caused CEO Severin Schwan thinks that under COVID-19 China is cutting down on the number of patients being treated in hospitals, expected to reverse in Q4 and next year.
*Today saw a boost in prices for Roche, up 1.75%; Astra Zeneca AZN up 1.1%; Beigene (BGNE) of China, up 4.9% to another high. It is now up $13 to $317.2; Glaxo (GSK), up 1.9%; Zymeworks (ZYME) up 1.5%; Israeli Compugen CGEN up 0.7% and even Teva TEVA up 0.81%. Dr. Reddy's RDY gained 0.87% today
*A sell was put on Glaxo by UK chartists investor's intelligence today. GSK rose because it HIV combo in its Viiv sub got the right to sell in the European Union today.
*However Gilead GILD fell 1% on the Pfizer PFE news. My best performer in the drug business is Bristol Myers BMY, up 2%, and Thermo Electron up 1.25%. Being American both are bonus stocks.
Finance
*Sweden's Wolfe Report published an attempt to forecast how its plan to sell its remaining 19.9% stake in Nordea Bank in the next 2 to 4 years will affect Sampo Oij of Finland which we own. There are a lot of players including former SAXPY boss Bjorn Wallroos who himself is a stockholder in Nordea, plus several Nordic governments, with Finland the biggest owning Sampo shares. Under current policy, Sampo pays out 70% of its own earnings in dividends to its shareholders.
The report concludes that shareholders may lose part of their nifty yield unless they get a slice of the proceeds from selling Nordea. The writer thinks Nordea will do this, keeping yield at nearly 5%. But if not the payout will drop to 4.32%. My former writer on Finnish matters, Seija, has retired and stopped contributing.
*Banco Santander gained 2.92% today in early trading. SAN has been heavily dumped.
*Veolia Environnement is up fractionally today on hopes for its winning control of archrival Suez via a buy of 29.9% of Engie is being heard in French courts. VEOEY is down 1.5% this week at $20.75, however.
*Standard Life Aberdeen SLFPF gained another 8.85% today. It combines insurance with fund management.
*State Street beat thanks to cost cuts and fee income but STT stock has been hovering between a gain and a loss all day. Its eps came in at $1.45/sh down 4% from last year but beating the broker estimate of $1.41. Its revenues at 2.784 bn beat forecast 2.770 bn but were 4.1% lower than last Q3. It refused to give any guidance after rising 11% in the last quarter.
Tech
*A big drop took down Hong Konglisted Tencent by nearly 8% today to HK$528, in part because of a Chinese plan to introduce data protection for tech stocks to be voted by the People's Congress Sat. Naspers is down 1.4% but Prosus is up 1.44%, both backdoor ways to own 10¢. NPSNY; PROSY.
*Mercado Libre gained 1.7% at the opening today but now is up only 1.02%. MELI is the Amazon of Latin America.
*Swedish auto electronics make Veoneer VNE won a buy rating from Mizuho based on its Japanese business, with a new target price of $95, about 25% up from where it trades now.
*Antofagasta won a UK recommendation yesterday and is up a fraction. ANFGF mines some lithium.
Green stocks
*NIO rose another 1.4% today, making it something like the best performing stock on earth.
*Ormat ORA, geothermal energy production and storage systems maker, is up nother 3.52%. It is Israeli-owned although incorporated in Nevada so Friday is when you pounce.
*Canadian Solar, CSIQ, is down today, however, at $38.17, hit by China concerns. It makes its solar panels there even if it sells via Canada.
*Algonquin Power & Ute of Canada is up 0.8%. AQN.
*AZRE, Azure Power Global of Mauritius however is down.
Mexicans
*Ricardo Salinas Pliego caught coronavirus. Salvador Cienfuegos who headed the war on drug cartels for Prexy Peña Neto, was arrested for working for the cartels on the sly. So Mexican shares got a boost: Grupo Bimbo; Mexichem, Cemex, Fibra Uno all gained, in order of how much with FBASF the winner. Even Mexican Equity & Income Fund gained 2¢.
Lots of news and a few interesting opinions.
But I feel no sympathy for the petroleum sector after all the years of price gouging on gasoline prices. None at all. Shades of "instant Karma" perhaps?? OR???
as a Manhattanite I do not run a car but my impression is that gasoline sales prices are 1) competitive 2) regulated and 3) taxed. What I like is the European oil companies getting set for lower demand for gasolene as electric vehicles come to market, and their investment in alternative fuels, not typical of their US rivals. They are buying into low-carbon which means for the longer term. Note that in European counties which are trying to meet the Paris standards to cut carbon the oil companies are taking the lead in funding solar, wind, LNG, and other alternatives. This kind of long-term investing smarts cannot be found among US oil giants.
In Michigan the gas is taxed a whole lot, But the sell price is regulated by "the Oakland County Petroleum Dealers Association", in order to prevent price wars like there used to be back in the 1950's era. Thus there is not much competition to be found among service stations around here. I am aware that in the UK gasoline is taxed heavily to support public transportation, This results in a lot less personal freedom of movement,
Gasolene is taxed not just in Britain but in most European counties. It doesn't stop freedom of movement because people pay the tax, but it did lead to serious protests by the yellow shirts in France who said they could not afford it.
I think the US oil majors are more reluctant than European ones to invest in the new alternative fuels that will power cars in the future, like batteries for electric vehicles.
My favorite idea for that is China's NIO which will sell its electric vehicles with leased batteries, so when they run down the car driver can switch batteries at a service station rather than having to hang around for the recharging.
NIO is NYSE listed and has gained the most year to date and is well ahead of even Tesla. It is funded in part by the local government of the town where it is headquartered. Volkswagen also benefits from the same subsidies so it is not only for Chinese.