Amgen Gets Lean

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Market Scorecard

Like a punch-drunk boxer, US markets wobbled during the day, but somehow rallied in the afternoon to win the day. Meanwhile, US midterm election results are rolling in and early indications are that government gridlock will ensue when Republicans take control of the House of Representatives. Leaving aside your personal ideological preferences, this is seen as the best outcome for stocks.

In company news, Disney (NYSE: DIS ) sank 6.8% after reporting that losses in its streaming business widened, offsetting strong performance at their theme parks. Elsewhere, Take-Two Interactive (NASDAQ: TTWO ) shares dropped 14% after the game publisher cut its full-year outlook. Lastly, Lyft (NASDAQ: LYFT ) stock fell 23% after the ride-hailing company said its revenue growth slowed and the number of people using its service remained below pre-pandemic levels.

At the closing bell, the JSE All-share was down 0.62%, but the S&P 500 gained 0.56%, and the Nasdaq rose by 0.49%.

Bright's Banter

Vestact-recommended stock Amgen (NASDAQ: AMGN ) released its third-quarter earnings last week which beat both on earnings and revenue. This sent shares higher, bringing the total year-to-date returns to above 29%. That's very impressive, given that the overall S&P 500 index is down 20% for 2022.

Total revenues increased by 1% to $6.7 billion year-on-year, but profit was 15% higher driven by an 8% rise in volume for its cancer, rheumatology, and cardiovascular products, with eleven drugs achieving record sales. Sales of medicines that treat osteoporosis and migraines surged 35% year-on-year. This was offset by lower prices for arthritis drug Enbrel and the stronger US Dollar.

The big news in the quarter is that Amgen has developed a drug, currently just labelled AMG133, which blocks a hormone and a protein involved in regulating blood sugar levels, to address obesity. It has garnered increased attention following strong sales of Novo Nordisk's Wegovy and Eli Lilly's Tirzepatide drugs which also promote rapid weight loss.

This new therapy along with Olpasiran (a drug that was found to reduce levels of lipoprotein, which is a risk factor for cardiovascular disease) has put some excitement back into Amgen's share price after drifting sideways in recent years. We are very pleased to have this stock in many client portfolios. Our patience is being rewarded.

One Thing, From Paul

Vestact has a small team of four investment advisors, including myself. We've been at it for twenty years, and are now servicing 1 214 clients. Our assets under management are R6.4 billion (that's $356.7 million at the current exchange rate).

I've been asked why we don't employ many more people, open new branches outside of Johannesburg and try to grow much faster. The reason is that we prefer it this way, with a tight team working together in one office.

I was thinking about this while reading an interesting blog post about special forces teams in the military. It was written by Chris Papasadero, who was in the US Army Green Berets.

He says: "Quality is better than quantity. A small number of people, carefully selected, well trained, and well led, are preferable to larger numbers of troops, some of whom may not be up to the task. Small teams of people who are able to work in sync can change the world".

Byron's Beats

Fully autonomous self-driving cars are proving very hard to create. I have no doubt we will get there eventually, it is just taking longer than expected. For now, we will have to operate in smart cars. These cars help us drive and have lots of extra software features.

Google (NASDAQ: GOOGL ) and Renault (EPA: RENA ) have extended their partnership to include an advanced software platform for cars according to The Verge. Google already has a car operating system which offers built-in Assistant, Maps and Play Store. This announcement will take it to a new level. The collaboration will create a digital twin between the car and the software that will feature advanced intelligence capabilities. Sounds cool.

As cars get smarter, the natural progression to self-driving will happen after collecting billions of kilometres of data and driving behaviour. Maybe we were trying to jump the gun, self-driving cars need to evolve slowly.

Michael's Musings

There are never any winners in a war, whether it's military combat or a trade dispute. Trade relations between China and the US have been deteriorating since Trump initiated a trade war and Biden carried it on. Recently, China's increased focus on Taiwan has led to an escalation in tensions.

Last month, US-linked companies were banned from sending advanced microchips to China. Chip maker Nvidia (NASDAQ: NVDA ) stands to lose an estimated $400 million in sales for the current quarter. However, Nvidia just announced that they have made a new advanced chip for China that meets US export controls. According to Reuters, the chip is already on sale in China.

The share price popped 2% yesterday on the news. We will hear more about these issues from the company next week when they announce their latest results.

Signing Off

Asian markets are a bit sloppy this morning with benchmark indices climbing in South Korea, but falling in Hong Kong, Japan and mainland China. Shares of Chinese property developers looked better than most, jumping higher as a key regulator expanded financial support for the sector.

A spat between two of the richest people in digital currencies spilled over into the crypto markets. Bitcoin is trading at its lowest level since November 2020, on news that has fallen over and will be bailed out by rival exchange Binance. As ever, we advise you to invest in shares of real, prosperous companies and avoid these internet coins.

US equity futures are slightly higher in early trade. The Rand is trading at around R17.75 to the greenback.

It's a beautiful sunny day in Johannesburg. Sparkling blue skies and green foliage. What a time to be alive!

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