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Friday, March 31, 2023


Trendless Tuesday – A Pause in the News Cycle

Not much is going on.

If I were lazy, I'd stop right there and that would be the morning report.  Even Trump hasn't done anything new to piss me off this morning.  He even confirmed yesterday's rant on Kushner's Saudi agenda by saying about the arrested Saudi Princes that "Some of those they are harshly treating have been 'milking' their country for years." 

I have great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing….

One of those princes, keep in mind, is Rupert Murdoch's partner, Alwaleed Talal, who went against Trump during the election, tweeting:


You are a disgrace not only to the GOP but to all America.

Withdraw from the U.S presidential race as you will never win.

Well ha, ha, ha Alwaleed – now Trump is President and you are in jail and we are selling a ton of military equipment to your rivals in Saudi Arabia – how's that for petty vengeance?  Do you think Putin is the only person who can interfere in foreign elections?  NO ONE interferes with other countries like America – we are number one!

This is indeed a new era in politics as we used to keep it a secret when we used our influence overseas to elminate our enemies – now we tweet about and get 93,000 likes…  Are we great yet?  Trump also did not hold back while in Japan, shown here at his high-level meeting with Shinzo Abe but, right after the game, Trump lashed out at Japan's trade policies, saying:

“We want fair and open trade. But right now, our trade with Japan is not fair and it’s not open. The US has suffered massive trade deficits with Japan for many, many years.

Our Trade Deficit with Japan last year was $69Bn but we're 4 times bigger than they are yet we "only" buy twice as much of their stuff as they do of ours, economically, how do we make that "fair"?  Should Japan buy 4x more stuff from the US and dump all their other Trading Partners or should we buy 3/4 less stuff and maybe ban Toyota and Sony in the US?  As Trump said:

“Many millions of cars are sold by Japan into the United States, whereas virtually no cars go from the US into Japan…Try building your cars in the United States instead of shipping them over. That’s not too much to ask. Is that rude to ask?

Image result for us japan tradeOf course, that statement was factless as Japanese automakers manufactured 4.2M cars and 4.5M engines in the US last year and Toyota (2.6M), Honda (1.6M) and Nissan (1.5M) combined sold 5.7M cars total so, essentially, they already build the vast majority of their cars in the US – about 50 times more than Tesla (TSLA) makes!  

In truth, the whole thing is really a ploy to get Japan to buy more US Military equipment – that's what Trump is really there to sell and Military equipment is something Japan doesn't currently buy much of so they can "fix" the trade imbalance by arming up.  

Trump is in Seoul today, less than 100 miles from Kim Jung Un and I can't wait to hear what nuggets come in today's speeches.  Tomorrow he's off to Beijing, where I'm sure he will fix China's Trade Deficit too and then it's off to Da Nang and then Hanoi – for some reason spending two days in a country he worked hard not to visit when he was younger.  Trump's trip concludes on Sunay in Manilla and then it's Mueller time next Monday…

Meanwhile, when the news is dull we play the technicals and, this morning, my note to our Members was:

Europe trending down since the open, /NKD rejected harshly at 23,000 (22,880 now) despite the strong Dollar (94.98) and that makes Dow (/YM) a fun short at the 23,500 line with VERY TIGHT STOPS ABOVE.  Oil $57.50 is another fun short and /RB is already pulling back to $1.818 while /NG is rejected at $3.15.

We'll see what happens today but yesterday's BS story about Disney (DIS) buying Fox (FOXA) was typical of the M&A rumors that mark a market top – as fund managers try to stir up excitement in the sectors they are trying to dump.  

Be careful out there.



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TEVA-Tied up yesterday and just getting caught up.  This is going to be a patience play.  I think management may have already given up on the IG rating especially given where spreads are and the nature of the HY indices.  That would allow them some flexibility to buy back stock sooner rather than later and it's a bargain at these level. 


~~Fitch Ratings has downgraded Teva Pharmaceutical Industries Limited's (Teva) ratings, including the company's Long-Term Issuer Default Rating (IDR) to 'BB' from 'BBB-'. The Rating Outlook is Negative.

* Fitch's rating action reflects the belief that Teva is facing significant
  operational stress at a time when it needs to reduce debt from the August
  2016 acquisition of Actavis' generic drug business. Pricing pressure in
  Teva's North American generics segment and erosion of sales of Copaxone will
  continue to weigh on free cash flow in the near term, requiring the company
  to continue to sell assets or find external capital resources to meet debt
  obligations in 2018 and 2019 and beyond.
* The Negative Outlook reflects the uncertainty around whether the company's
  challenges will deepen and the nature and timing of the company's response to
  such challenges such as whether Teva would seek equity financing to reduce
  its debt burden, Fitch stated.
* Deleveraging Necessary: Â Teva needs to reduce debt following its acquisition
  of Actavis' generic business. Estimated pro forma leverage was above 4.0x at
  deal close, and Fitch looks for leverage to stay elevated over the ratings
  horizon absent aggressive and committed deleveraging. Teva has a number of
  levers to achieve deleveraging, including reducing costs to stabilize EBITDA
  and paying down debt with FCF (including reducing its dividend) and asset
  sales proceeds. It is in the process of restructuring and integrating the
  Actavis acquisition. Teva announced on Nov. 1, 2017 that it completed the
  divestiture of PARAGARD to CooperSurgical for $1.1 billion and on Nov. 2,
  2017 it announced that it completed the sale of Plan B One-Step for $675
  million. Fitch believes the proceeds of these and future sales will be used
  to repay term loan debt. In total, Fitch expects the proceeds from the sales
  of the entire global Women's Health business will be approximately $2.3
* Generic Pricing Headwinds:Â Pricing pressure, particularly on the U.S.
  generics business, which comprises 23% of total revenues for the nine months
  ended Sept. 30, 2017, will continue to meaningfully weigh on revenue and
  margins in the near term. Fitch is forecasting 10% price erosion for U.S.
  generics in 2018 and 5% erosion in 2019. Teva's ability to counter price
  erosion in the base generics business is limited because of consolidation
  amongst purchasers of generics drugs and increased competition due to faster
  FDA approvals of competitor products.
* Over the medium to long term, Fitch believes that Teva may benefit from its
  focus on innovative pharmaceuticals and difficult to manufacture, chemically
  complex drugs, which generally command relatively more defensible prices and
  margins. However, the commoditized portion of its generic drug portfolio is
  more prone to pricing pressure. That pressure, combined with the headwinds to
  the Copaxone franchise discussed below, is expected to result in gross
  leverage for Teva remaining above 5x by year-end 2019, Fitch stated.
* Competition from Generic Copaxone 40mg: Compounding the generic pricing
  headwinds, Teva's best-selling branded product, Copaxone (Fitch estimates is
  approximately 15-20% of sales; approximately 40-50% of operating profits), is
  gradually declining in sales. Generic competition for Copaxone is expected in
  the last quarter of 2017 in the U.S. market in light of the FDA approval of a
  generic version of both the 20mg and 40mg formulations of the drug. The
  effect of this generic launch will depend on the resolution of ongoing
  litigation surrounding the IP, but it will likely accelerate Teva's revenue
  declines upon entrance. Fitch understands that the negative impact of this
  launch may be a reduction of approximately $0.25 per share in Q417, Fitch
* Asset Sales Required:Â Teva is taking meaningful steps to reduce costs and
  stabilize margins. However, just operational stabilization and dividend
  reduction will be insufficient to provide the FCF needed to deleverage below
  the 4.0x level that is consistent with an investment grade profile by year
  end 2018. Given the expected further deterioration in both the U.S. generic
  business and Copaxone sales in 2018, today's downgrade reflects Fitch's
  expectation that Teva is unlikely to meet its 4.0x target even considering
  asset sales. Management has entered into definitive agreements for $2.3
  billion in asset sales so far in 2017, with about $1.8 billion of these sales
  completed, and proceeds from additional asset sales along with FCF are
  expected to help reduce debt due in 2018. As with all asset sales, the
  valuation multiples (sales price/EBITDA) are variable and important inputs
  into the deleveraging potential, Fitch said.
* Acquisition Strengthens Leading Position:Â The acquisition of Actavis
  Generics (Gx) solidified Teva's position as the largest generic drug firm in
  the world, combining the #1 (Teva) and #4 (Actavis Gx) players. The firm has
  unmatched scale in most relevant pharmaceutical markets. Scale has begun to
  factor even more prominently for generic drug makers in recent years, as the
  largest purchasers have consolidated dramatically in the U.S. and Western
  Europe. The combination gives Teva a more competitive value proposition for
  these very large global purchasers, albeit diminished over the past year
  because of such consolidation, Fitch stated.
* Changes in Key Management: Teva's CEO Erez Vigodman left the firm in February
  2017 and was replaced by Kare Schultz in Sept. 2017. Schultz has nearly 30
  years of experience in the global pharmaceutical industry, most recently
  serving as CEO of H. Lundbeck A/S where he drove significant restructuring
  efforts. As a result of the change in senior leadership, Fitch will be keenly
  interested in the plans developed by Teva to respond to existing challenges
  and how those plans balance the interests of shareholders and debt holders,
  Fitch stated.

thanks Seer! I hope you are right about being a bargain.


You mean like this guy?

comment image

In Seoul, Trump calls for North Korea to make a deal

Dmulligan – saw your SCO question from yesterday and i believe we already did a roll of our SCO position rolled from 10 $35 puts out to April 2018 $29 puts (15 of them) and adjusted the BCS i believe, unless this wasnt official? If you look back at last week you should be able to find it

~~ VRX – Valeant Pharma +11% following earnings/guidance .


Now this pisses me off.  I shorted a few hundred shares of TEVA after the close, and after hours it went higher, not lower, so I bought them back.  How does that happen?

~~•Tesla (TSLA) files for shelf offering of 34,772 shares of common stock on behalf of a selling stockholder.


The SCO position I have from last week as a new trade was April 27/37 BCS with  $29 puts, with a 4 to 3 ratio, BCS to puts.

Baron–as a PSW member you are not allowed to have gains shorting TEVA!!! 

Good Morning.

Jabo, did you do that, holding up TEVA afterhours?  What about this morning?



Teva Pharma downgraded to Reduce from Hold at HSBC Securities  (12.41)



You need more than patience to invest in these FU stocks… 

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Earnings in this week. What is your take?


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