In The $$$MONEY$$$

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

5 Blockbuster Drugs for 2013
Big drug makers have alluring pipelines for this year – here's our list of the most promising treatments with potential sales of $1 billion and up.
http://online.barrons.com/article/SB50001424052748703792204578217532798022170.html

JANUARY 2, 2013
By JOHANNA BENNETT

The heyday of blockbuster drug discoveries may be gone, but 2012 turned out to be the best year in recent memory for new drug approvals, offering the promise of help for patients and big sales opportunities for drug makers.

The U.S. Food and Drug Administration gave the green light last year to 39 new drugs, for diseases that include cancer, HIV and cystic fibrosis, the highest number of approvals since the mid-1990s.

The outlook for 2013 is almost as sunny. Regulators are on track to approve as many as 36 novel drug compounds able to generate U.S. sales of $9 billion in 2018, says Michael Latwis, director of corporate research for Decision Resources.

It isn't easy to predict which drugs will beat expectations by enough to boost the stocks of a pharmaceutical giant. Barrons.com picked five candidates that have a high probability of getting regulatory approval in 2013 and advancing the treatment of a serious illness. They each have the potential to deliver annual sales of more than $1 billion – in layman's terms, to become blockbusters. Even at a pharmaceutical giant such as Merck & Co. (ticker: MRK), with annual sales of more than $45 billion, that's real money.

Of course, the FDA is unpredictable. And while more Americans may afford prescriptions under the Affordable Care Act, even innovative therapies can flop if insurers don't pay, doctors don't prescribe and patients don't use. Just look at the disappointing sales of the obesity drug Qsymia, and the 50% drop in drug makerVivus's (VVUS) share price since July.

"It's always a challenge," says Decision Resources' Latwis. "Things never get easier for the drug industry."

Other companies have had better luck. Of the five drugs highlighted by Barrons.com last year (see Weekday Trader,"5 Big Drugs for 2012," Jan. 25, 2012), the FDA approved four in 2012: The blood thinner Eliquis, Kalydeco for cystic fibrosis, tofacitinib for rheumatoid arthritis and the HIV medication known as the Quad.

Here's our list of five of the most promising new drugs for 2013, and their top-line potential.

BG-12

BG-12 isn't the first oral treatment for multiple sclerosis. But big expectations for the drug have pushed the stock price for Biogen Idec (ticker: BIIB) 120% higher over the past two years, and shares now trade at $146, or 22 times forward earnings.

BG-12 delivered robust results in clinical trials and few side effects. That gives it a leg up over Gilenya, a rival oral therapy from Novartis (NVS) now facing safety worries.

Biogen also sells the injectable multiple sclerosis drugs Avonex and Tysabri. Oral medications are easier to take and can cut treatment costs by eliminating the need to buy equipment used to administer intravenous drugs.

Critics say early estimates for BG-12's are too aggressive. Still, annual sales could reach $4 billion by 2019, says Cowen & Co. analyst Eric Schmidt.

Canagliflozin

Canagliflozin could be the first of a new class of diabetes drugs to hit the U.S.

Known as an SGLT2 inhibitor, Johnson & Johnson's (JNJ) canagliflozin lowers blood sugar levels by increasing glucose excretion in the urine. And so far clinical trials show the drug works alone or with existing treatments, and helps patients lose weight.

Scheduled for approval in mid-2013, canagliflozin is J&J's first diabetes medication. But there are potential roadblocks: A similar drug from Bristol-Myers Squibb (BMY) andAstraZeneca (AZN) has been delayed due to safety worries.

Also, there are unpleasant side effects, including increased risk of urinary tract infections and raised cholesterol, says Barclays Capital analyst Tony Butler. Still, he sees sales reaching $1 billion by 2018.

Suvorexant

Merck hopes suvorexant could help 70 million sleepless Americans catch a few winks.

Merck's drug blocks chemical messengers called orexins that help keep the brain alert, letting patients fall asleep faster and stay asleep longer, while also minimizing grogginess the next morning. Another potential advantage: Studies suggest patients could use suvorexant longer than current therapies.

Insomnia is an enormous market, though littered with generics and the remains of failed efforts by other big drug makers.

Also, suvorexant may not be available until 2014 because, as a controlled substance, it requires assessment by the Drug Enforcement Administration. Still, Barclays's Butler sees sales in 2017 peaking at $1.5 billion.

T-DM1

T-DM1, developed by Roche (RHHBY), combines two old drugs to deliver a powerful one-two punch to cancer cells.

Called a "drug conjugate," it attaches a chemotherapy drug to the breast cancer therapy Herceptin. The Herceptin attacks HER2 proteins on the surface of the cancer cell, while also delivering a poisonous payload that enters the cell and kills it.

T-DM1 isn't a cure. In studies it did delay worsening of a form of breast cancer with fewer side effects than traditional chemotherapy. And its approval – expected in February -- could lay the groundwork for a potential series of new cancer treatments.

Meanwhile, T-DM1 sales could reach $2 billion by 2018, according to analysts from Cowen.

GS-7977

Also called sofosbuvir, GS-7977 is the wild card on our list. Though many expect FDA approval in early 2014, the market for hepatitis C drugs – at $5 billion and growing – may push regulators to act sooner.

Hepatitis C affects 180 million people globally, outpacing AIDs and HIV. The demand for better treatments has several big drug makers fighting to be the first to deliver an all-oral drug regime.

Gilead Sciences (GILD), with GS-7977, could win that race. In trials, the drug was superior to the current treatment regimen, which includes injections of the drug interferon. That fueled big hopes and helped Gilead's share price rise 80% last year.

Analysts at Cowen expect Gilead to file for FDA approval during the second quarter, and see annual sales reaching $4 billion by 2016, or 23% of the $17 billion top line Wall Street expects Gilead to generate that same year.

Of course, sales forecasts can be wildly optimistic, thus the old adage "buy the approval and short the launch." Government austerity in Europe is pressuring drug prices. And with increasingly complex compounds filling research pipelines, it's hard to handicap regulators.

If these five drugs can meet expectations, however, they could be just what the doctor ordered.

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

FDA Calendar 2013
FDA Calendar - 2013 FDA Drug Approval Decision Calendar - TheStreet

For biotech and drug companies, years of clinical trials and tens, if not hundreds, of millions of dollars in research and development culminate in a singular, all-important event: The decision by the U.S. Food and Drug Administration or its European counterparts to approve or reject a new medicine.

Investors certainly know all too well the importance of drug approval decisions on drug and biotech stocks. Next to clinical trial results, nothing drives a biotech stock higher or lower more than a U.S. or European drug approval decision.

The following calendar lists the dates of relevant FDA and European drug approval decisions, as well as FDA advisory committee meetings. The calendar will be updated regularly.

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

Does the Stock Rally Still Have Steam?
"Until the world gets a little scarier, equities are likely to continue to outperform" bonds, writes David Kelly, a JPMorgan strategist.
http://online.barrons.com/article/SB50001424052748704852604578302213851729672.html

WEDNESDAY, FEBRUARY 13, 2013
By DAVID KELLY

In theory, the continued strong rally in U.S. and global stocks in early 2013 should be regarded as a very positive development for investors.

In practice, emotions are more mixed, ranging from the regret felt by those who missed out on much of the rally by being overweight fixed income and cash, to distrust in the minds of those who have seen markets rise to these levels twice before in the last dozen years, only to be followed by two huge bear markets.

However, investing should always be based on logic rather than emotion and a first logical step in deciding on how to invest from here is to understand what has driven the markets higher to this point.

First, it must be said that it has been an impressive move. As this is being written, just since the start of this year, the Standard & Poor's 500 is up by 5.8%, which represents most of the gains that could have been expected for an entire year.

While eurozone markets are generally flat, other global markets have also seen gains with the FTSE up 5.6%, year-to-date, the Nikkei up 9.3% and the Shanghai Composite up 6.6%. At the same time, government bond yields have drifted up, with the U.S. 10-year bond yield rising from 1.76% to 1.95%.

This is not a rally driven by economic momentum. The U.S. saw real GDP growth turn negative in the fourth quarter of 2012, and while that number overstates economic weakness there is little reason to expect a sharp bounce in output in early 2013, particularly because of the fiscal drag inflicted on the economy by the New Year's Day compromise in Congress. The January employment report, by contrast showed solid job growth entering the first quarter.

The earnings season has been uninspiring, with a few large write-offs reducing the year-over-year gain in S&P500 earnings per share to almost nothing. Moreover, first-quarter economic momentum still looks suspect, with clear weakness in chainstore sales numbers and a slight month-to-month decline in light vehicle sales.

Housing activity continues to improve, but overall, the U.S. economy can at best be described as expanding rather than accelerating. Meanwhile, January purchasing index data from around the world show shrinking manufacturing activity in the Euro Zone, Japan and Australia with only a mild pickup of economic momentum in Emerging Markets.

Nor should the rally be ascribed to more enlightened monetary and fiscal policies. In the U.S., a tighter-than-optimal tax agreement on New Year's Day leaves the economy with significant fiscal drag with the distinct danger of more to come should the parties fail to agree on an alternative way to cut long-term spending to replace the long-dreaded "sequester" now scheduled to kick in on March 1.

Meanwhile the Fed's continued balance sheet expansion appears to be generating more debate than lending activity. The new Japanese government has proposed more monetary and fiscal expansion, but this cannot inspire confidence given the track record of these tools in achieving a Japanese revival over the last 20 years.

Finally in Europe, while the ECB has successfully convinced markets that the banks are safe and that it will protect the sovereign debt market, the governments themselves remain on a relentless path of deficit reduction through austerity, which, in a recessionary economy, is normally both painful and ineffective.

What has happened is that "tail risks" have fallen.

Over the course of the past year, the danger of a financial collapse in Europe has clearly receded, a "hard landing" in China has been avoided, continued gains in U.S. energy production have reduced our vulnerability to a Middle East oil shock and the New Year's Day agreement, combined with a three-month suspension of the debt ceiling, has reduced the danger of a Washington-produced crisis.

As these tail risks have fallen, the "tail valuations", that is to say the cheapness of stocks relative to the extremely expensive global fixed income markets, has induced investors to move money from bonds into stocks.

One sign of this is that, based on preliminary data, January saw a bigger inflow into stock mutual funds than any month in the past five years. While the pace of these flows is likely to abate, the trend may well continue.

The bottom line is that, even with slow global growth, until the world gets a little scarier, equities are likely to continue to outperform fixed income investments. This being the case, it probably still makes sense for long-term investors to still be a little over-weight equities relative to their "normal" appropriately balanced portfolio.

Kelly is chief global strategist for JPMorgan Funds.

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

Huge Dividends!

Annaly Capital Management, Inc. (NYSE:NLY)
http://www.annaly.com/site/default.aspx
Annaly Capital Management, Inc.: NYSE:NLY quotes & news - Google Finance


American Capital Agency Corp. (NASDAQ:AGNC)
American Capital Agency Corp - Home
American Capital Agency Corp.: NASDAQ:AGNC quotes & news - Google Finance

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

[ame=http://www.youtube.com/watch?v=VdYu63riP0Y]Andreas Halvorsen, hedge fund manager of Viking Global Investors - YouTube[/ame]

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

Expecting Ziopharm Shares To Run Into Phase III Data At Month's End
Expecting Ziopharm Shares To Run Into Phase III Data At Month's End - TheStreet

It can be considered relatively safe to trade biotech stock run-ups ahead of FDA approval decisions and advisory panels. These binary events give traders the benefit of having a fixed date to trade around. Traders who want to minimize risk can exit or reduce their positions before these dates.

Clinical trials, however, rarely give traders this type of security because the timing of data announcements is usually a guessing game. When companies do give guidance on the timing of clinical trial results, it's usually no more specific than a certain quarter or half year.

For traders like myself, the lack of a narrow time window around which to trade clinical trial results is a dangerous situation. The last thing I want to happen is to become trapped in a stock when data results are announced unexpectedly. The only time I'll trade around clinical trial results is when a company offers a narrow time window for announcing results.

Celsion was a recent and profitable example. Last November, the company announced it would have phase III study results ready for release in January. Immediately, shares of Celsion went on a huge run, as traders now had a definitive timeline to trade around. Traders were able to close out positions at the end of December with profits and avoid the risk of holding stock if/when Celsion announced results. And getting out of Celsion prior to the data turned out to be the smart trade because the phase III study failed. Celsion shares now trade for less than $1.

Another biotech run-up trading opportunity presents itself today with Ziopharm, which has told investors to expect phase III study results for it sarcoma drug palifosfamide in the last week of March.

With overall market uncertainty, I have been trading biotech catalysts with much tighter windows. When the speculative markets are running, it can be profitable to buy any stock with a catalyst, no matter how far out. However, the markets have been trading in a much tighter range, with European economic concerns and potential government actions drawing more attention.

Ziopharm falls perfectly into this trading style because we have less than a month before the palifosfamide data are announced. As we get closer, I expect the company to gain more interest from investors and traders, especially since the catalyst occurs much sooner than the late April and early May regulatory catalysts that many traders are focused on -- Sucampo (SCMP_), Raptor Pharmaceuticals(RPTP_), Navidea Biopharmaceuticals (NAVB_), Titan Pharmaceuticals (TTNP_), Aveo Oncology (AVEO_) and Delcath Systems (DCTH_) .

After a recent price-target reduction from Jefferies, Ziopharm shares are trading near their 52-week low in the $4 range. Even with the palifosfamide data immient, the stock is still trading well below last summer's highs in the low-$6 range. I expect as we get closer to its clinical trial catalyst, Ziopharm shares will break through $5 and trade into the mid to high $5 range.

As always, run-up traders should close their positions before the last week of March.

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

Investors’ Quandary: Get In Now?
http://www.nytimes.com/2013/03/06/business/investors-quandary-get-in-now.html

March 5, 2013
By JEFF SOMMER

So is it too late for investors to join the party?

The stock market has already more than doubled since the dark days of 2009. Records are being set, and most indexes have risen nearly every week this year.

Nearly all strategists point out that it is much better to buy at a market bottom than to invest after a record has been set. Nonetheless, for those willing to accept the risk, there are strong arguments, based on history and on market fundamentals, for believing that the bull market may still have room to run.

Chief among them is the expansive monetary policy of the Federal Reserve. “The old song on Wall Street is ‘Don’t fight the Fed,’ and that certainly has been the case in this market,” said Byron Wien of the Blackstone Group, who is a veteran of many market rallies and slumps. “The Fed and other central banks have been driving the market, and there’s no sign that’s going to stop.”

Another critical factor is the flow of funds into the stock market, said Laszlo Birinyi, who runs a stock research firm in Westport, Conn. “There is still a lot of money sitting on the sidelines — and there are a lot of people who are still jumping in, and that, in itself, is a good thing for the market,” he said.

According to his calculations, the net inflow into stocks over the last 12 months has totaled $76.7 billion, which helps to explain why the Standard & Poor’s 500-stock index has risen more than 13 percent in that period. Net inflows to stocks amount to $27.75 billion this calendar year, he said, and barring a big shock, they are likely to continue. “We’re in the fourth and last stage of a long-running bull market,” he said. “We think there’s a lot more to come.”

No one really knows whether history is a reliable guide, but the pattern of past bull markets also suggests that this one could continue to flourish. At the moment, according to the Bespoke Investment Group, the nearly four-year run of the United States stock market is the eighth-longest in the last 100 years, and it is the sixth-strongest in terms of the return of the S.& P.’s 500 index. And since 1900, when the Dow Jones industrial average reached a nominal high, as it did on Tuesday, the Dow has averaged a 7.1 percent rise over the next 12 months.

“We believe stock valuations are still reasonable, and that the momentum of the market will keep moving it upward,” said Paul Hickey, co-founder of Bespoke.

Because of the intervention of the Fed, even some longtime market bears are reluctant to bet against the current rally. “This is impressive, no doubt about it,” said David A. Rosenberg, the former chief North American economist at Merrill Lynch and now chief strategist of Gluskin Sheff in Toronto. “There are many major risks out there, but at the moment the central banks are doing a spectacular job of buffering them.”

Mr. Rosenberg has a reputation for being a “permabear,” and he has recently emphasized investing in high-yield bonds and corporate credit instruments over stocks. As far as the immediate future of the stock market goes, he said, “I think we’re overdue for a correction.”

Major problems on the horizon, he said, include a weak economy that is being hobbled further by the recent payroll tax increase and the indiscriminate federal budget cuts that have just been put in place. And the troubles in the euro zone, which flared last month in Italy, are far from over, he said, “There are problems everywhere you look.”

Yet he is reluctant to predict a sustained stock market decline. Precisely because the economy is weak, he said, the central banks will be forced to keep short-term interest rates low. “People seeking income have been fleeing other asset classes,” he said, “and they have been moving their money into the stock market.”

For the short term, problems in Europe may actually be helping the United States, said Michael G. Thompson, managing director of S&P Capital IQ’s Global Markets Intelligence. “The gridlock produced by the Italian election has been a catalyst for the United States market,” he said in a telephone interview from London. “It seems to have reminded people that Europe is unstable — and so it has given them another reason to move money into the United States.”

Mr. Thompson said that while earnings growth for the S.& P. 500 had slowed, a combination of low rates and “canny management by C.E.O.’s of big companies” made it likely that corporate profits would hit a record this year. “As long as the Fed keeps its foot on the gas and as long as we stay out of a recession, I think there’s a good chance this market will continue.”

Not everyone is sanguine, however. “It’s getting downright embarrassing to be bearish with all this exuberance around,” said Rob Arnott, the chairman of Research Affiliates, an asset management firm in Newport Beach, Calif. “With so many people eager to buy stocks, it’s a wonderful time for us to take some risk off the table.”

Mr. Arnott, who manages the Pimco All Asset Fund, said the economy was weak enough that there was a reasonable chance the United States was already back in an undeclared recession. An economic or financial shock could induce a sharp market decline, he said.

“My view is simple,” he said. “Could this rally continue? Absolutely. But do I want to take a risk on a rally that will at some point certainly reverse and leave a lot of people helplessly trying to de-risk in an unliquid market decline? No. I don’t want to be part of that crowd.”

In the logic of contrarian investing, this kind of pessimism encourages Mr. Birinyi. “Market sentiment has not reached irrationally positive levels yet,” he said. “That implies to me that the market is still grounded, and that it can keep on rising.”

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

Common Biotech-Newbie Mistakes

Drug programs:

1. “If a drug does something notable in animals, it must be safe and effective for humans.”

2. “If a drug from the same class succeeds, it means my company’s drug will succeed too.”

3. “If a drug with the same mechanism of action succeeds, it means my company’s drug will succeed too.”


Dealings with the FDA:

4. “If a drug has Fast Track status, it means FDA approval is very likely.”

5. “If a drug has a Priority Review, it means FDA approval is almost certain.”

6. “If a drug has an Expanded Access program, it must be safe and effective, so the FDA will obviously approve it.”

7. “If a company has a meeting with FDA staffers and does not issue a negative press release, it means the FDA agrees with everything the company is doing.”


Behavior of company management:

8. “If the CEO says a company is talking to partners, it means a partnership is imminent.”

9. “If a company goes into a period of radio silence, it means they are negotiating a big partnership deal or buyout.”

10. “If an FDA application is started on a rolling basis pending the completion of clinical data, it means the data are positive. The company would not waste so many man-hours of work on the submission if it weren’t.”

11. “If a company is preparing for a launch—e.g. by advertising for sales reps—it means their drug will surely be approved.”

12. “If a company holds an investor conference call on a different day of the week (or a different time of day) from prior conference calls, it means a hugely bullish announcement is coming!”


Miscellaneous:

13. “If a former executive from Big Pharma joins a small biotech company, it means the small company must be a winner!”

14. “If the company’s Scientific Advisory Board has one or two famous individuals, it means the company’s drug candidates must work. These people would not align themselves with a failure!”

15. “If Rodman & Renshaw issues a positive opinion on a company, it means the company’s prospects must be bright.”

16. “If a well known investor or hedge fund owns shares, it means the company will surely succeed.”

17. “If a small biotech company is located in the same town as a Big Pharma, it must be a top candidate for a buyout.”

18. “If knowledgeable posters are bashing a stock, it means they are trying to ‘accumulate’ shares, so I should increase my holding!”

Statistics:

19. "If the trial wasn't halted for futility at the interim the trial must be a success."

20. "If the trial is 'running long' the trial must be a success."

21. "If my company has data from even a small (or post hoc) ph i or ph ii then it hugely outweighs the general fact that drugs in similar indications (or using related MOAs or ...) have a very high failure rate in ph iii."

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

TheMoneyIllusion
TheMoneyIllusion

Short intro course on money
TheMoneyIllusion

I tried to put together a short intro course on money for students who have already studied basic macroeconomics. It consists of nine posts:

1. Money matters a lot. (and non-monetary shocks don’t matter as much as you’d think.)

2. Why does money matter?

3. Money and inflation, pt. 1: The long twilight of gold.

4. Money and inflation, pt. 2: Why does fiat money have value?

5. Money and inflation, pt. 3: The “hot potato” model (The QTM and the Great Inflation)

6. Money and inflation, pt. 4: The role of expectations

7. Money and inflation, pt 5: It’s (almost) all about expectations

8. Money and output (the musical chairs model)

9. Money and asset prices (the liquidity effect as an epiphenomenon)

I will maintain a link under “Quick intro to my views” in the right column. I may update occasionally.

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

Sell in May and Go Away: Visualizing the Performance
http://philosophicaleconomics.wordpress.com/2013/04/15/sell-in-may-and-do-what-exactly-charting-the-strategies/

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

Dow 16,000!
Our latest Big Money poll shows record levels of bullishness among America's money managers, despite concerns about the U.S. economy, Federal Reserve policy, and Europe's financial mess.
http://online.barrons.com/article/SB50001424052748703318404578427170246873366.html

SATURDAY, APRIL 20, 2013
By JACK WILLOUGHBY

The stock market isn't the only thing that has set records this spring. Barron's semiannual Big Money poll of professional investors also is setting a record -- for bullishness, that is. In our latest survey, 74% of money managers identify themselves as bullish or very bullish about the prospects for U.S. stocks -- an all-time high for Big Money, going back more than 20 years. What's more, about a third of managers expect the Dow Jones industrials to scale the 16,000 level by the middle of next year, notwithstanding a dismal week of selling that left the blue-chip index at 14,547.51 on Friday.

A quick trip through history reveals that only 45% of managers were bullish in the spring of 1999, and 54% in the fall of that year, even as the dot-com boom was inflating. Similarly, bullish sentiment was in the mid-40% range in the mid-2000s, as the housing market was on the boil and stocks last were hitting fresh peaks.

Six months ago, just 46% of managers were bullish, down from 55% in the spring 2012 poll. Stocks have rallied 10% since our fall survey was published on Oct. 29.

This spring's survey is notable, as well, for the dearth of bears: A mere 7% of respondents are pessimists today, down from 27% last fall. The remaining bears looked pretty smart last week, as the Dow lost 2.1%, and commodities prices plummeted. But recent conversations with other Big Money managers suggest they expect stocks to resume rising, despite a litany of concerns -- about fiscal gridlock in the U.S., the debt crisis in Europe, money-printing worldwide, and a still-sluggish global economy.

Professional investors remain well ahead of their clients in bullish sentiment. Sixty-two percent say their clients are bulls on stocks now, while 38% claim their customers are bears.

THE BIG MONEY BULLS have Dow 15,000 firmly in their sights. Based on their mean prediction, the industrials will finish the year at 15,136, some 4% above current levels, and reach 15,750 by mid-2014, for a gain of 8.3% from Friday's close.

As for Dow 16,000, it implies a 10% advance. And more than a fourth of our respondents think the rally won't stop there.

The managers expect the Standard & Poor's 500 to trace a similar path in the months ahead, advancing 4.2%, to 1621, by year end, and 8.2%, to 1682, by the following June. Their mean Nasdaq forecast for Dec. 31 -- 3440 -- suggests a further gain of 7.3% for the tech-heavy index, which they say could hit 3573 in next year's first half.

Tim Call, chief investment officer at Capital Management, near Richmond, Va., sees growth in both the economy and the stock market accelerating for four reasons. Housing, he notes, is reviving after a five-year recession. Auto manufacturing also is picking up, and the energy industry is building the requisite infrastructure to exploit the discovery of domestic shale oil and gas. That will lead to U.S. energy independence and the return of plastic and synthetic-rubber manufacturing domestically. Finally, the absence of inflation is overstating consumer wealth, Call says.

Call expects the Dow to rally to 16,000 by June 2014. Bonds present the real risk, he says, while stocks are "underappreciated and overlooked."

The bull market is hardly in its infancy, our respondents acknowledge, but neither is it "game over." To put it in baseball terms, 61% say the rally is somewhere between the fifth and seventh innings. That's roughly consistent with their views on valuation: Fifty-eight percent declare the market fairly valued, and 26% call it undervalued.

"The amount of money that's playing defensive is astronomical," says Robert Lutts, president of Cabot Money Management in Salem, Mass. "Main Street isn't yet in Wall Street. It is still scared to death. In the past couple of years, the professional money started to flow in. This is just the beginning of new flows that will push indexes even higher."

Lutts, who expects the Dow to scale 17,500 by mid-2014, notes that two long-delayed, midsize real-estate projects are under way in Salem -- a bullish development that is being duplicated nationwide. "I love it when my clients push back," he says. "They're reading the headlines too closely, and coming away with myopic negative impressions. Folks continually underestimate the resilience of the American economy and entrepreneur."

WHAT WOULD SEND STOCKS SHARPLY higher in coming months? The managers cite rising corporate earnings, first and foremost, followed by any sign in Washington of progress toward a bipartisan budget deal. "A government with a severe spending problem is no different than a person with a severe drinking problem," says John Boland, of Maple Capital Management in Montpelier, Vt. "In the short run, it might not matter, but longer-term, the problems are deadly. Without an intervention, the U.S. is rapidly heading toward cirrhosis of the economy."

Fortunately, perhaps, only 16% of managers say their investment decisions are heavily influenced by U.S. fiscal policy. But many seem worried about trends at home, and the nation's place in the world. Fifty-five percent of managers don't believe that the U.S. is a waning world power, but 37% do. Small wonder the Big Money folks finger political dysfunction as one of the biggest challenges facing the market, along with Europe's problems, potential earnings disappointments, and a possible deceleration in economic growth.

Even so, the managers aren't just bullish on U.S. stocks, but on equities generally. Some call it the TINA trade, for "there is no alternative" to stocks in a slow-growth, ultralow-interest-rate world. Eighty-six percent of poll respondents are bullish on stocks for the next 12 months, and a whopping 94% like what they see for the next five years. Real estate has similar approval ratings.

Scott Westphal, managing director, real- estate securities, at Cornerstone Real Estate Advisers in Stamford, Conn., is neutral on stocks. But he notes that undervalued real-estate investment trusts, yielding about 4%, could provide a defense against a possible market correction. He sees a 10% pullback in equities in the next six months that could take the froth off the market. "Ultimately, it will be a good thing because it will draw more people into the market and broaden the base of equity investors," says Westphal, who likes select regional-mall and apartment REITs.

The managers are split in their near-term assessment of commodities, but bullish longer-term. Most are skeptical about gold for this year, which seems like a prescient call in view of the metal's ugly 5.3% slide last week, to $1,402 a troy ounce. As for bonds and cash, they have few fans at the moment. Nearly all of the managers expect fixed-income assets to be a bad bet in the next five years.

Says Scott Schermerhorn, chief investment officer of Granite Investment Advisors in Concord, N.H.: "A lot of investors don't realize how much money can be lost in bonds when long-term interest rates rise sharply." Fortunately, our investment managers do.

The managers are especially enthusiastic about emerging markets, particularly for the long haul. Twenty-seven percent think emerging markets will offer the best investment returns in the next six to 12 months, but 45% expect them to be the best performers over five years, something only 30% say about U.S. stocks. Near-term, our respondents also are fans of Brazil and Japan, mixed on the prospects for China, and decidedly cool toward Europe.

BARRON'S CONDUCTS THE BIG MONEY poll every spring and fall, with the help of Beta Research in Syosset, N.Y. The latest poll was e-mailed in mid-March and drew responses from 135 institutional investors from across the country, representing both smaller firms and some of the largest asset managers in America.

Poll participants look for technology, energy, and financial stocks to lead the market in the next 12 months. On the downside, roughly one in four expect utilities to be the biggest laggards. The managers also are downbeat about the prospects for consumer staples, consumer cyclicals, and basic-materials shares.

Some managers see significant turmoil ahead for the tech sector, especially as personal computers are forsaken for mobile computing devices. IDC reported two weeks ago that PC sales plunged 14% in the first quarter, the steepest drop since the company began tracking the market in 1994, and Intel (ticker: INTC), one of the industry's biggest suppliers, posted dismal quarterly results last week, although it offered better full-year guidance.

Intel is a favorite among Big Money managers, despite -- or perhaps because of -- its punk performance in the past year. The stock has fallen almost 20%, to $22. It is trading for 10.8 times 2014 estimated earnings of $2.03 a share, and yields 4%, which may explain much of the attraction. "Once you look past the headlines, things are getting better at Intel," says Loomis Sayles Chairman Dan Fuss, who likes the semiconductor maker's dividend and cash flow. With the PC business threatened, he calls Intel a "controversial" pick, but the sort that can produce compelling returns.

APPLE (AAPL) IS ANOTHER stock about which the Big Money crowd is passionate -- both positively and negatively. The shares closed at $390.53 Friday, after peaking at $705 in mid-September, and now trade for nine times the $43.58 a share the company is expected to earn in the fiscal year ending in September. "Product cycles are faster, and they have to compete," says John Roberts, of Denver Investments. "But there still is a lot of room for Apple to take market share on the desktop."

Sixty-seven percent of the managers who responded to our poll gave Apple a thumbs up; only Berkshire Hathaway (BRKA) and IBM (IBM) elicited a more positive response. On the negative side, more than 70% gave a thumbs down to Facebook (FB),Herbalife (HLF), and J.C. Penney (JCP), while 96% panned Sears Holdings(SHLD), another struggling retailer.

Although few in number, the Big Money bears don't lack conviction, especially with the market now going their way. They predict, on average, that the Dow will drop to 13,500 by year end, and make no progress through the following June. They see the S&P 500 falling to the 1440-to-1450 region, and the Nasdaq backtracking to about 3000. The S&P closed at 1555.25 last week; the Nasdaq, at 3206.06.

Big companies might have worked wonders to lift profits by cutting costs, but that strategy has worn thin, says Greg Roeder, a portfolio manager at Adirondack Funds, in Guilderland, N.Y. He predicts the Dow will drop by 14% in the next year. "Top-line growth will be needed to push stocks higher, and it will be a huge challenge, given fiscal problems in Europe and the U.S., as well as high energy prices," he observes.

Roeder adds that baby-boomer clients can't handle much investment risk, which could complicate the market's trajectory further. "While we loved this market in early 2009 and 2010, we are now paring our winners and reallocating capital to quality names," he says.

BP (BP) isn't the sort of quality name that springs to many minds, especially after the company's involvement in a massive oil spill in the Gulf of Mexico two years ago, but Roeder begs to differ. At a recent $40.99, the stock was trading for only 1.0 times estimated book value of $40 a share, and nine times this year's $4.77 in estimated earnings. Roeder calls it a turnaround story that "everyone" loves to hate.

MARC DION, A PORTFOLIO MANAGER at Morgan Dempsey, in Milwaukee, also is bearish on stocks, and worries about an "unusual" level of complacency on the economy. He also is concerned about the Federal Reserve's easy-money policies, aimed at holding down interest rates to spur economic growth. "The value paradigm is broken," he says, citing the effects of near-zero rates. "Everything is risk-free. It's become a race to debase. I feel like I'm part of some weird experiment that isn't really working. Where are the sustainable economic successes? I haven't seen any."

Even long-range bulls, such as Christopher Tsai, founder of Tsai Capital in New York, see resistance to stocks in the near term, given record-low interest rates and record-high profit margins that eventually must revert to historic means. Ultimately, Tsai sees demographics pushing stocks higher.

While baby boomers will be selling shares to fund retirement, "there has been little discussion about wealth accumulation among the echo boomers, and the positive effect on prices that this bucket of money is likely to generate," he comments.

By some calculations, the wealth of the post baby-boom generations could grow to $28 trillion from $2 trillion now, as they both earn more and start inheriting money from their parents.

Tsai favors high-quality multinationals with pricing power, including Zoetis(ZTS), a maker of veterinary medicines spun off from Pfizer (PFE) earlier this year. Almost 30% of the company's revenue comes from emerging markets, he notes, adding that Zoetis has established strong relationships with veterinary clinics and farms.

ALTHOUGH MOST BIG MONEY MANAGERS are stockpickers, the macroeconomic outlook helps shape their investment decisions. It looks decent, but hardly great, to them. Seventy-two percent of poll respondents expect the U.S. economy to keep plodding along in the next year at an annual rate of 2% to 3%, while 44% predict that the growth rate of gross domestic product will average the same 2.5% in the next 10 years that it has for the past 25. That said, 37% see the economy growing at a slower pace in the future.

"The U.S. is doing OK, but [the economy] is being fueled by a flood of liquidity," says James Vanasek, of VN Capital in New York, referring to the Fed's easy-money monetary policies. "The big question is what will happen when it stops."

Vanasek expects the Dow to lose about a thousand points between now and June 2014, although he professes to be bullish over the much longer term.

Fuss, of Loomis Sayles, says 2.5% GDP growth is strong enough to keep the Fed happy, but not strong enough to bring the unemployment rate down to the central bank's target of 6.5%. Even so, about half of the Big Money managers don't expect the Fed to take further measures, such as quantitative easing, in the next six months. Forty-seven percent think the central bank will start raising interest rates again in 2014, after several years and multiple rounds of bond-buying, while 35% look for such action to come in 2015.

Bond yields have been tumbling since early March, when the yield on 10-year Treasuries stood at 2.07%. Last week the 10-year settled at 1.70%, evidence of "risk off" after a two-month stretch of good news sent investors into equities. Forty-five percent of our respondents expect the 10-year yield to back up to 2% in the next six months, while 39% think the benchmark Treasury could yield 2.5% six months from now.

FED CHAIRMAN BEN BERNANKE, architect of the central bank's QE strategy and inspiration for similar schemes around the world, ends his second term in January 2014, and his plans thereafter are subject to much speculation. Should Bernanke decide to step down and return to private life, 77% of Big Money managers -- and many other observers -- think he would be succeeded by Janet Yellen, an economist, former professor, and current vice chair of the Fed's Board of Governors. Seventeen percent of managers, however, think President Barack Obama would tap William Dudley, a former Goldman Sachs economist who currently serves as president of the Federal Reserve Bank of New York.

Interestingly, only a fourth of our respondents say Yellen, a defender of quantitative easing, would be their top choice for Fed chair, and only 10% would pick Dudley. Eleven percent say they'd favor Richard Fisher, president of the Federal Reserve Bank of Dallas and an inflation hawk, while another 10% would like to see John Taylor, a professor of economics at Stanford University and an outspoken critic of current Fed policy, named to lead the institution.

Inflation worries the U.S. money managers as much as it worries the folks at the Fed, and 60% of our respondents think it will be a bigger threat in the next 12 months than it is now. Excluding food and energy, the consumer price index rose by an annualized 1.9% in March, below expectations. But the Big Money crowd sees CPI jumping 2.51% next year.

Inflation fears could push up the price of gold. The managers' mean prediction for 2014 puts bullion back at $1,600, where it traded before this month's selloff. In the near term, however, more losses could be in store. "When they start having seminars at the local Holiday Inn on how to invest in something, it's usually over," says Granite's Schermerhorn, who argued recently that gold prices had been inflated by excess speculation.

The Big Money managers also keep an eye on foreign exchange, and most expect the dollar to stay strong. Indeed, 83% see the greenback rising against the euro in the next 12 months, and 78% see it up against the yen. Lately, the buck has been especially strong against the Japanese currency, a consequence of Japan's new policy to drive down interest rates to spur export growth.

The managers show little enthusiasm for Europe, which has been grappling with sovereign-debt losses and economic crises. Sixty-five percent of respondents proclaim themselves bearish on European stocks for the next 12 months, and 75% believe it will take five to 10 years for the euro zone to resolve its problems. That's up significantly from 58% last fall.

Jeff Schoenfeld, a partner at Brown Brothers Harriman, says Europe is paralyzed and is ignoring its main problem -- a sick banking system. "A healthy banking system is a precondition for things getting better," he observes. "European banks are shrinking their balance sheets to meet global capital standards, and that's not what to do to keep an economy growing."

THE BIG MONEY MANAGERS see subdued growth for corporate profits of 5% to 6%, both this year and next. They expect the market's price/earnings ratio to hold steady at 15.7. The managers plan to reduce their cash and fixed-income positions in coming months, and to invest more in stocks and alternative assets.

One thing is for sure: This has been a tough year for active money managers. Only 59% of our pros are beating the S&P 500 in their client accounts, and even fewer are doing so with their own money.

Here's a final prediction for 2013: The market will continue to surprise.

 

[BBC3]

Re: I Am In The $$$MONEY$$$

WOW! How the fuck did that happen. I think thats about where it was prior to the last crash. Seems like in my LIMITED following of the market since, the best it ever returned to was flirting with 12K all the time, and still back down all the time.?? I bet there's a LOT of 401'ers that have been holding their postitions just dreaming of this day!! A true correction to NORMALCY would put this as about the baseline from here forth, and with 12K now being the new "healthy bottom" for bad times. THIS NOTION should be the test of MARKET VALIDITY today. Then again, with consideration for the INFLATION that has occurred in the last 5 years.50-100% in many cases, that number is only finally a fair assessment with no REAL ground gained what-so-ever. Economics is the key to sound investing, and this one should have been a no brainer. But folks are running around like the zebra in the heard a pack of lions is stalking, except WITH A HELL OF A LOT LESS SENSE...[)]

Dow 16,000!
Our latest Big Money poll shows record levels of bullishness among America's money managers, despite concerns about the U.S. economy, Federal Reserve policy, and Europe's financial mess.
http://online.barrons.com/article/SB50001424052748703318404578427170246873366.html

SATURDAY, APRIL 20, 2013
By JACK WILLOUGHBY

The stock market isn't the only thing that has set records this spring. Barron's semiannual Big Money poll of professional investors also is setting a record -- for bullishness, that is. In our latest survey, 74% of money managers identify themselves as bullish or very bullish about the prospects for U.S. stocks -- an all-time high for Big Money, going back more than 20 years. What's more, about a third of managers expect the Dow Jones industrials to scale the 16,000 level by the middle of next year, notwithstanding a dismal week of selling that left the blue-chip index at 14,547.51 on Friday.

A quick trip through history reveals that only 45% of managers were bullish in the spring of 1999, and 54% in the fall of that year, even as the dot-com boom was inflating. Similarly, bullish sentiment was in the mid-40% range in the mid-2000s, as the housing market was on the boil and stocks last were hitting fresh peaks.

Six months ago, just 46% of managers were bullish, down from 55% in the spring 2012 poll. Stocks have rallied 10% since our fall survey was published on Oct. 29.

This spring's survey is notable, as well, for the dearth of bears: A mere 7% of respondents are pessimists today, down from 27% last fall. The remaining bears looked pretty smart last week, as the Dow lost 2.1%, and commodities prices plummeted. But recent conversations with other Big Money managers suggest they expect stocks to resume rising, despite a litany of concerns -- about fiscal gridlock in the U.S., the debt crisis in Europe, money-printing worldwide, and a still-sluggish global economy.

Professional investors remain well ahead of their clients in bullish sentiment. Sixty-two percent say their clients are bulls on stocks now, while 38% claim their customers are bears.

THE BIG MONEY BULLS have Dow 15,000 firmly in their sights. Based on their mean prediction, the industrials will finish the year at 15,136, some 4% above current levels, and reach 15,750 by mid-2014, for a gain of 8.3% from Friday's close.

As for Dow 16,000, it implies a 10% advance. And more than a fourth of our respondents think the rally won't stop there.

The managers expect the Standard & Poor's 500 to trace a similar path in the months ahead, advancing 4.2%, to 1621, by year end, and 8.2%, to 1682, by the following June. Their mean Nasdaq forecast for Dec. 31 -- 3440 -- suggests a further gain of 7.3% for the tech-heavy index, which they say could hit 3573 in next year's first half.

Tim Call, chief investment officer at Capital Management, near Richmond, Va., sees growth in both the economy and the stock market accelerating for four reasons. Housing, he notes, is reviving after a five-year recession. Auto manufacturing also is picking up, and the energy industry is building the requisite infrastructure to exploit the discovery of domestic shale oil and gas. That will lead to U.S. energy independence and the return of plastic and synthetic-rubber manufacturing domestically. Finally, the absence of inflation is overstating consumer wealth, Call says.

Call expects the Dow to rally to 16,000 by June 2014. Bonds present the real risk, he says, while stocks are "underappreciated and overlooked."

The bull market is hardly in its infancy, our respondents acknowledge, but neither is it "game over." To put it in baseball terms, 61% say the rally is somewhere between the fifth and seventh innings. That's roughly consistent with their views on valuation: Fifty-eight percent declare the market fairly valued, and 26% call it undervalued.

"The amount of money that's playing defensive is astronomical," says Robert Lutts, president of Cabot Money Management in Salem, Mass. "Main Street isn't yet in Wall Street. It is still scared to death. In the past couple of years, the professional money started to flow in. This is just the beginning of new flows that will push indexes even higher."

Lutts, who expects the Dow to scale 17,500 by mid-2014, notes that two long-delayed, midsize real-estate projects are under way in Salem -- a bullish development that is being duplicated nationwide. "I love it when my clients push back," he says. "They're reading the headlines too closely, and coming away with myopic negative impressions. Folks continually underestimate the resilience of the American economy and entrepreneur."

WHAT WOULD SEND STOCKS SHARPLY higher in coming months? The managers cite rising corporate earnings, first and foremost, followed by any sign in Washington of progress toward a bipartisan budget deal. "A government with a severe spending problem is no different than a person with a severe drinking problem," says John Boland, of Maple Capital Management in Montpelier, Vt. "In the short run, it might not matter, but longer-term, the problems are deadly. Without an intervention, the U.S. is rapidly heading toward cirrhosis of the economy."

Fortunately, perhaps, only 16% of managers say their investment decisions are heavily influenced by U.S. fiscal policy. But many seem worried about trends at home, and the nation's place in the world. Fifty-five percent of managers don't believe that the U.S. is a waning world power, but 37% do. Small wonder the Big Money folks finger political dysfunction as one of the biggest challenges facing the market, along with Europe's problems, potential earnings disappointments, and a possible deceleration in economic growth.

Even so, the managers aren't just bullish on U.S. stocks, but on equities generally. Some call it the TINA trade, for "there is no alternative" to stocks in a slow-growth, ultralow-interest-rate world. Eighty-six percent of poll respondents are bullish on stocks for the next 12 months, and a whopping 94% like what they see for the next five years. Real estate has similar approval ratings.

Scott Westphal, managing director, real- estate securities, at Cornerstone Real Estate Advisers in Stamford, Conn., is neutral on stocks. But he notes that undervalued real-estate investment trusts, yielding about 4%, could provide a defense against a possible market correction. He sees a 10% pullback in equities in the next six months that could take the froth off the market. "Ultimately, it will be a good thing because it will draw more people into the market and broaden the base of equity investors," says Westphal, who likes select regional-mall and apartment REITs.

The managers are split in their near-term assessment of commodities, but bullish longer-term. Most are skeptical about gold for this year, which seems like a prescient call in view of the metal's ugly 5.3% slide last week, to $1,402 a troy ounce. As for bonds and cash, they have few fans at the moment. Nearly all of the managers expect fixed-income assets to be a bad bet in the next five years.

Says Scott Schermerhorn, chief investment officer of Granite Investment Advisors in Concord, N.H.: "A lot of investors don't realize how much money can be lost in bonds when long-term interest rates rise sharply." Fortunately, our investment managers do.

The managers are especially enthusiastic about emerging markets, particularly for the long haul. Twenty-seven percent think emerging markets will offer the best investment returns in the next six to 12 months, but 45% expect them to be the best performers over five years, something only 30% say about U.S. stocks. Near-term, our respondents also are fans of Brazil and Japan, mixed on the prospects for China, and decidedly cool toward Europe.

BARRON'S CONDUCTS THE BIG MONEY poll every spring and fall, with the help of Beta Research in Syosset, N.Y. The latest poll was e-mailed in mid-March and drew responses from 135 institutional investors from across the country, representing both smaller firms and some of the largest asset managers in America.

Poll participants look for technology, energy, and financial stocks to lead the market in the next 12 months. On the downside, roughly one in four expect utilities to be the biggest laggards. The managers also are downbeat about the prospects for consumer staples, consumer cyclicals, and basic-materials shares.

Some managers see significant turmoil ahead for the tech sector, especially as personal computers are forsaken for mobile computing devices. IDC reported two weeks ago that PC sales plunged 14% in the first quarter, the steepest drop since the company began tracking the market in 1994, and Intel (ticker: INTC), one of the industry's biggest suppliers, posted dismal quarterly results last week, although it offered better full-year guidance.

Intel is a favorite among Big Money managers, despite -- or perhaps because of -- its punk performance in the past year. The stock has fallen almost 20%, to $22. It is trading for 10.8 times 2014 estimated earnings of $2.03 a share, and yields 4%, which may explain much of the attraction. "Once you look past the headlines, things are getting better at Intel," says Loomis Sayles Chairman Dan Fuss, who likes the semiconductor maker's dividend and cash flow. With the PC business threatened, he calls Intel a "controversial" pick, but the sort that can produce compelling returns.

APPLE (AAPL) IS ANOTHER stock about which the Big Money crowd is passionate -- both positively and negatively. The shares closed at $390.53 Friday, after peaking at $705 in mid-September, and now trade for nine times the $43.58 a share the company is expected to earn in the fiscal year ending in September. "Product cycles are faster, and they have to compete," says John Roberts, of Denver Investments. "But there still is a lot of room for Apple to take market share on the desktop."

Sixty-seven percent of the managers who responded to our poll gave Apple a thumbs up; only Berkshire Hathaway (BRKA) and IBM (IBM) elicited a more positive response. On the negative side, more than 70% gave a thumbs down to Facebook (FB),Herbalife (HLF), and J.C. Penney (JCP), while 96% panned Sears Holdings(SHLD), another struggling retailer.

Although few in number, the Big Money bears don't lack conviction, especially with the market now going their way. They predict, on average, that the Dow will drop to 13,500 by year end, and make no progress through the following June. They see the S&P 500 falling to the 1440-to-1450 region, and the Nasdaq backtracking to about 3000. The S&P closed at 1555.25 last week; the Nasdaq, at 3206.06.

Big companies might have worked wonders to lift profits by cutting costs, but that strategy has worn thin, says Greg Roeder, a portfolio manager at Adirondack Funds, in Guilderland, N.Y. He predicts the Dow will drop by 14% in the next year. "Top-line growth will be needed to push stocks higher, and it will be a huge challenge, given fiscal problems in Europe and the U.S., as well as high energy prices," he observes.

Roeder adds that baby-boomer clients can't handle much investment risk, which could complicate the market's trajectory further. "While we loved this market in early 2009 and 2010, we are now paring our winners and reallocating capital to quality names," he says.

BP (BP) isn't the sort of quality name that springs to many minds, especially after the company's involvement in a massive oil spill in the Gulf of Mexico two years ago, but Roeder begs to differ. At a recent $40.99, the stock was trading for only 1.0 times estimated book value of $40 a share, and nine times this year's $4.77 in estimated earnings. Roeder calls it a turnaround story that "everyone" loves to hate.

MARC DION, A PORTFOLIO MANAGER at Morgan Dempsey, in Milwaukee, also is bearish on stocks, and worries about an "unusual" level of complacency on the economy. He also is concerned about the Federal Reserve's easy-money policies, aimed at holding down interest rates to spur economic growth. "The value paradigm is broken," he says, citing the effects of near-zero rates. "Everything is risk-free. It's become a race to debase. I feel like I'm part of some weird experiment that isn't really working. Where are the sustainable economic successes? I haven't seen any."

Even long-range bulls, such as Christopher Tsai, founder of Tsai Capital in New York, see resistance to stocks in the near term, given record-low interest rates and record-high profit margins that eventually must revert to historic means. Ultimately, Tsai sees demographics pushing stocks higher.

While baby boomers will be selling shares to fund retirement, "there has been little discussion about wealth accumulation among the echo boomers, and the positive effect on prices that this bucket of money is likely to generate," he comments.

By some calculations, the wealth of the post baby-boom generations could grow to $28 trillion from $2 trillion now, as they both earn more and start inheriting money from their parents.

Tsai favors high-quality multinationals with pricing power, including Zoetis(ZTS), a maker of veterinary medicines spun off from Pfizer (PFE) earlier this year. Almost 30% of the company's revenue comes from emerging markets, he notes, adding that Zoetis has established strong relationships with veterinary clinics and farms.

ALTHOUGH MOST BIG MONEY MANAGERS are stockpickers, the macroeconomic outlook helps shape their investment decisions. It looks decent, but hardly great, to them. Seventy-two percent of poll respondents expect the U.S. economy to keep plodding along in the next year at an annual rate of 2% to 3%, while 44% predict that the growth rate of gross domestic product will average the same 2.5% in the next 10 years that it has for the past 25. That said, 37% see the economy growing at a slower pace in the future.

"The U.S. is doing OK, but [the economy] is being fueled by a flood of liquidity," says James Vanasek, of VN Capital in New York, referring to the Fed's easy-money monetary policies. "The big question is what will happen when it stops."

Vanasek expects the Dow to lose about a thousand points between now and June 2014, although he professes to be bullish over the much longer term.

Fuss, of Loomis Sayles, says 2.5% GDP growth is strong enough to keep the Fed happy, but not strong enough to bring the unemployment rate down to the central bank's target of 6.5%. Even so, about half of the Big Money managers don't expect the Fed to take further measures, such as quantitative easing, in the next six months. Forty-seven percent think the central bank will start raising interest rates again in 2014, after several years and multiple rounds of bond-buying, while 35% look for such action to come in 2015.

Bond yields have been tumbling since early March, when the yield on 10-year Treasuries stood at 2.07%. Last week the 10-year settled at 1.70%, evidence of "risk off" after a two-month stretch of good news sent investors into equities. Forty-five percent of our respondents expect the 10-year yield to back up to 2% in the next six months, while 39% think the benchmark Treasury could yield 2.5% six months from now.

FED CHAIRMAN BEN BERNANKE, architect of the central bank's QE strategy and inspiration for similar schemes around the world, ends his second term in January 2014, and his plans thereafter are subject to much speculation. Should Bernanke decide to step down and return to private life, 77% of Big Money managers -- and many other observers -- think he would be succeeded by Janet Yellen, an economist, former professor, and current vice chair of the Fed's Board of Governors. Seventeen percent of managers, however, think President Barack Obama would tap William Dudley, a former Goldman Sachs economist who currently serves as president of the Federal Reserve Bank of New York.

Interestingly, only a fourth of our respondents say Yellen, a defender of quantitative easing, would be their top choice for Fed chair, and only 10% would pick Dudley. Eleven percent say they'd favor Richard Fisher, president of the Federal Reserve Bank of Dallas and an inflation hawk, while another 10% would like to see John Taylor, a professor of economics at Stanford University and an outspoken critic of current Fed policy, named to lead the institution.

Inflation worries the U.S. money managers as much as it worries the folks at the Fed, and 60% of our respondents think it will be a bigger threat in the next 12 months than it is now. Excluding food and energy, the consumer price index rose by an annualized 1.9% in March, below expectations. But the Big Money crowd sees CPI jumping 2.51% next year.

Inflation fears could push up the price of gold. The managers' mean prediction for 2014 puts bullion back at $1,600, where it traded before this month's selloff. In the near term, however, more losses could be in store. "When they start having seminars at the local Holiday Inn on how to invest in something, it's usually over," says Granite's Schermerhorn, who argued recently that gold prices had been inflated by excess speculation.

The Big Money managers also keep an eye on foreign exchange, and most expect the dollar to stay strong. Indeed, 83% see the greenback rising against the euro in the next 12 months, and 78% see it up against the yen. Lately, the buck has been especially strong against the Japanese currency, a consequence of Japan's new policy to drive down interest rates to spur export growth.

The managers show little enthusiasm for Europe, which has been grappling with sovereign-debt losses and economic crises. Sixty-five percent of respondents proclaim themselves bearish on European stocks for the next 12 months, and 75% believe it will take five to 10 years for the euro zone to resolve its problems. That's up significantly from 58% last fall.

Jeff Schoenfeld, a partner at Brown Brothers Harriman, says Europe is paralyzed and is ignoring its main problem -- a sick banking system. "A healthy banking system is a precondition for things getting better," he observes. "European banks are shrinking their balance sheets to meet global capital standards, and that's not what to do to keep an economy growing."

THE BIG MONEY MANAGERS see subdued growth for corporate profits of 5% to 6%, both this year and next. They expect the market's price/earnings ratio to hold steady at 15.7. The managers plan to reduce their cash and fixed-income positions in coming months, and to invest more in stocks and alternative assets.

One thing is for sure: This has been a tough year for active money managers. Only 59% of our pros are beating the S&P 500 in their client accounts, and even fewer are doing so with their own money.

Here's a final prediction for 2013: The market will continue to surprise.

 

[DTdr2]

SATURDAY, APRIL 20, 2013
By Dr. Alexander Elder

Volatility has been surging in the stock markets around the world. Here, in the US, the VIX, commonly called the Fear Index, jumped up 50% in the last week, from below 12 to above 18. As an old saying goes, “these are just the flowers; the berries are yet to come.” In 2012 VIX rallied above 27 and in 2011 above 48. Just think what mayhem we must see in the market for the Fear Index to revisit those levels. The long period of a steady rise and low volatility is at an end; high volatility is returning...

...now more than ever you need to protect all your positions with hard stops. As for opening new positions – this is no time to be a hero. Preservation of capital (and of peace of mind) are at the top of the agenda. You want to have your powder dry for great buying opportunities that will present themselves at the bottom of a panic.

But folks are running around like the zebra in the heard a pack of lions is stalking, except WITH A HELL OF A LOT LESS SENSE...

Good 'ol herd mentality What about the Experts who are interviewed for theses articles, "Only 59% of our pros are beating the S&P 500 in their client accounts, and even fewer are doing so with their own money." Yet this same herd remains bullish? Definitely a caution flag.

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

The Larvol Group to Announce Free Online Pharma Platform- Larvol Sigma http://www.larvol.com/media/media.html

About Larvol Sigma: Larvol Sigma is the first free clinical trial and pipeline intelligence platform. With a database containing over 5,000 drugs as well as more than 150,000 individual drug trials across all major indications, Larvol Sigma is a comprehensive free resource for investigators, researchers and industry professionals. http://sigma.larvol.com/merge/trialzilla.php

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

Just days after the event, the Milken Global Conference has put all the videos online:
http://www.milkeninstitute.org/events/gcprogram.taf?function=videos&eventid=GC13

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

[Disappearing] Morals and Markets

Many people express objections against child labor, exploitation of the workforce or meat production involving cruelty against animals. At the same time, however, people ignore their own moral standards when acting as market participants, searching for the cheapest electronics, fashion or food. Thus, markets reduce moral concerns. This is the main result of an experiment conducted by economists from the Universities of Bonn and Bamberg.


Falk A, Szech N. Morals and Markets. Science 2013;340(6133):707-11. Morals and Markets

The possibility that market interaction may erode moral values is a long-standing, but controversial, hypothesis in the social sciences, ethics, and philosophy. To date, empirical evidence on decay of moral values through market interaction has been scarce. We present controlled experimental evidence on how market interaction changes how human subjects value harm and damage done to third parties. In the experiment, subjects decide between either saving the life of a mouse or receiving money. We compare individual decisions to those made in a bilateral and a multilateral market. In both markets, the willingness to kill the mouse is substantially higher than in individual decisions. Furthermore, in the multilateral market, prices for life deteriorate tremendously. In contrast, for morally neutral consumption choices, differences between institutions are small.

 

[DTdr2]

Re: I Am In The $$$MONEY$$$

Turn-a-round Tuesday?

Tuesday: Total days 24: 19 up / 5 down ave. gain +9.4 handles ave. loss -6.4 handles

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

EvaluatePharma - World Preview 2013, Outlook to 2018
https://www.evaluategroup.com/Default.aspx

The sixth edition of EvaluatePharma’s World Preview brings together many of our analyses to provide a top level insight, from the world’s financial markets, into the expected performance of the industry between now and 2018. Based on EvaluatePharma’s coverage of the world’s leading 4,000 pharmaceutical and biotech companies, the World Preview highlights trends in prescription drug sales, patent risk, R&D spend, global brand sales and market performance by therapy area. Also included in the report is a brief review of 2012 performance.

Complimentary copies of the full report can be downloaded at: http://www.evaluategroup.com/public/reports/Evaluate-World-Preview-2013-Outlook-to-2018.aspx

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

The biotech IPO scene turns red hot
The biotech IPO scene turns red hot - FierceBiotech | Page full

 

[Michael Scally MD]

Re: I Am In The $$$MONEY$$$

Goldman's Top Disruptive Themes
Goldman's Top Disruptive Themes | Zero Hedge

The following eight secular disruptive themes are what Goldman Sachs believe have the potential to reshape their categories and command greater investor attention in the coming years. Critically Goldman focuses on the impact of creative destruction - a term coined by the economist Joseph Schumpeter, which emphasized the fact that innovation constantly drives breeding of new leaders and replacement of the old. These eight themes - through product or business innovation - are poised to transform addressable markets or open up entirely new ones, offering growth insulated from the broader macro environment and creating value for their stakeholders.

The Eight Themes:

• E-cigarettes – The potential to transform the tobacco industry
• Cancer Immunotherapy – The future of cancer treatment?
• LED Lighting – A large, early-stage and multi-decade opportunity
• Alternative Capital – Rise of a new asset class means growing risk for reinsurers
• Natural Gas Engines – Attractive economics drive strong, long-term penetration
• Software Defined Networking (SDN) – Re-inventing networking for the cloud era
• 3D Printing – Disruption materializing
• Big Data – Solutions trying to keep up with explosive data growth and complexity