SRE Beats On Bottom Line; Misses On Top Line -- November 2, 2016

Sempra Energy:

• Q3 EPS of $1.02 beats by $0.06. 
• Revenue of $2.54B (+2.4% Y/Y) misses by $140M.

Press release here.

The New York Times. Meanwhile, The New York Times: quarterly profit drops almost 100%.  Ads drying up.

The New York Times Co reported a 95.7 fall in quarterly profit, hit by restructuring charges related to headcount reductions.

Net profit attributable to the newspaper publisher fell to $406,000, or break-even per share, in the third quarter, from $9.4 million, or 6 cents per share, a year earlier.

Revenue fell to $363.6 million from $367.4 million. 

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Markets Worldwide Dropping

That's the headline: equity markets dropping worldwide.

The analysis: "Trump is gaining and world markets don't like it." That's the headline over at Yahoo!Finance.

So, let's think about that.

WHAT'S MORE LIKELY?

Traders pulling their money out of the market because Trump might be sworn in as president 75 days from now and whatever he is able to do won't take effect for months after that, with the assumption that what he does in his first 100 days has negative impacts on the economy a year from now. Traders pulling money out of the market this week because of something that might possibly happen a year from now?

OR

Saudi Arabia selling $8 billion worth of securities this month and every month going forward to make payroll. (I mentioned that the other day. See this post.)

If markets are tumbling "due" to the Trump effect, this is simply an "event"/"excuse" to take profits.

If markets are tumbling "due" to Saudi selling securities to meet payroll it gives one an idea how serious the oil crisis is for OPEC.

BY THE WAY

An analysis suggesting this is due to the "Trump" factor is not a bit surprising. The mainstream media has used "everything" to scare folks about voting for Trump. Scaring investors about a Trump victory is nothing different. So the real question is this: is the analysis ("the market slump is due to Trump) a rational economic analysis or simply propaganda to help Hillary? 

By the way, how is oil doing today? Down almost another dollar, now down below $46, the low end of the sweet spot for the price of oil in the US. [Update, mid-morning trading: WTI is down over 3%; down a $1.55; nearing $45. Could it break below $45? Enquiring minds want to know.]

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Can You Hear Me Now?

In "medicine," there are three branches: medical, surgery, and psychiatric.

The three branches attract different personalities.

Those going into surgery will see the results of their efforts measured in seconds, minutes, hours, or days (think: stents to save a heart attack victim).

Those going into medicine may not see the results of their efforts for days, weeks, months, or years (think: prescribing statins to prevent a heart attack).

Those going into psychiatry may not see the results of their efforts for months or years (psychotropic drugs generally take at least one month to begin to take effect).


That would be the same in business and investing. Actions have consequences, but some consequences take longer to be revealed.

I thought of that when I saw the headline today: Iranian minister says Boeing's huge deal with Iran Air to be finalized within days. Story here.

Boeing and Iran are "within days" of finalizing the details of Iran Air's massive order for 80 aircraft after it was approved by the U.S. government last month.

Those who made the decision to end/ease Iranian sanctions are seeing the effects (almost immediately) of that decision.

There may be a lot of ink used in all the stories about sanctions and about the US-Iranian relationship and what-ifs and who's right and who's wrong, but it's amazing how politics can really lead to cognitive dissonance. Something tells me that all the folks upset about Obama ending/easing sanctions are more than thrilled if they are investors in Boeing, or if they are blue collar Boeing employees. One wonders if Obama's biggest problem was his ability to communicate.

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Jet Propulsion Laboratory (JPL)

I think I grew up with JPL in the back of my mind -- at least during my coming-of-age years. There is really something "romantic" or intriguing or inviting about southern California, Pasadena, Colorado Boulevard, Big Bob's, Mount Baldy, California Institute of Technology, and so on and so on. Chemistry was my favorite subject in high school and had I grown up somewhere other than Williston, ND, it's hard to say what might have happened.

So, it's quite fascinating to read about the "origin" of the JPL.

I happened to read about it in Nathalia Holt's 2016 book on "Rocket Girls." I take notes on the book over at this post:

These are my abbreviated notes of the first few pages.

Begins in 1939

• Suicide Squad: began with three young men. Out of Pasadena; tinkering with homemade rockets, while one or two were students at Caltech. Worked in the Guggenheim Aeronautical Laboratory
• Barby, incredibly bright, fitting in classes at Occidental College
• 1939: National Academy of Sciences awards a grant to the Suicide Squad, now known as the GALCIT (Guggenhiem Aeronautical Laboratory at the California Institute of Technology)
• first year: $1,000
• second year: $10,000
• US government's first investment in rocket research
• in deference to Army Air Corps, they changed their name to Air Corps Jet Propulsion Research Project
• the group approached Richard and Barby Canright about being the mathematicians for the group

Back To EpiPens -- November 2, 2016

Updates

July 3, 2018: today, from The WSJ, Novartis will rollout EpiPen competitor.

Novartis’s Sandoz generic-drug unit acquired the U.S. commercial rights for an emergency shot called Symjepi from Adamis Pharmaceuticals Corp.

Symjepi contains the same active ingredient, epinephrine, as EpiPen, which is used to treat anaphylaxis caused by insect bites and foods, among other allergic reactions. Symjepi comes in a prefilled syringe, which Adamis says could make it cheaper than EpiPen, which comes in an auto-injector device that conceals the needle.

U.S. regulators approved Symjepi in June 2017 but Adamis, a San Diego startup, never launched the product and instead hired an investment banker to find a commercial partner for it. Sandoz, one of the biggest generic-drug makers, plans to begin selling it in the U.S.

Mylan came under criticism in 2016 for boosting the list price for an EpiPen two-pack to more than $600, up 550% since acquiring the product in 2007. The company has since started selling a generic version for about $300.

Mylan also has experienced supply shortages for EpiPen this year because of problems at a Pfizer Inc. manufacturing plant that makes the product.

Cheaper than $10? See original post below.
 

Original Post 

Back on August 27, 2016,  I wrote:

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The EpiPen Story

Holman W. Jenkins, Jr. has a great opinion piece on the $600 hammer EpiPen. He provided the obvious answer. Why pay $600 for an American two-pack of EpiPens, when you can get them for about $100 each in Canada (the internet will work just fine)?  By the way, it would be an interesting science project to see exactly how widely used EpiPens really are. In my 30+ years being in the business of medicine, I have never seen a layperson use an EpiPen. I've worked with school nurses for decades and I've never seen a school nurse (or even heard of a school nurse) using an EpiPen. Anyway, here's a Canadian site offering EpiPens for about $160/pen which is probably the "standard" price in Canada.

By the way, the EpiPen story gets crazier the more one looks at it. The standard EpiPen delivers 0.3 ml of 1:1000 epinephrine. One can buy a 1-ml amp (enough for three doses) of epinephrine for $4.49.

Three doses is one more dose than the standard 2-pack epinephrine provides. Three doses for $4.49 vs two doses for $600.

Syringes and needles are virtually free: every insulin-dependent diabetic has ample supplies of syringes and needles, and most jurisdictions provide the homeless and drug addicts with syringes and needles for free, it seems. Whatever the expense, it has to be nominal. The challenge of administering epinephrine in an emergency is not the "physical" action but the "mental" action. The "mental" action is recognizing an emergency; recognizing that it is an allergic reaction; knowing that epinephrine is needed; and knowing where that epinephrine is. Snapping open an ampule, "drawing up" 0.3 ml in a standard little syringe, and then using one's own fist to push the needle into the thigh (by holding onto the syringe) and using one's own thumb to push in the plunger is the entirety of the "physical" action. This is not rocket science. If one has the time to complete the "mental" action, one has ample time to complete the "physical" action. Emergency room physicians do not use EpiPens; they use syringes, generally handed to them by nurses or technicians.

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Good For Those Mormons

 
NOW GET THIS: according to NPR this morning (November 2, 2016), a hospital in Utah has finally done that. They are getting rid of Mylan EpiPens. They are putting two syringes and two vials of epinephrine in a zip-lock bag -- cost of the kit: $10. Good for those Mormons. 

As I said before: the Mylan EpiPen story is a non-story. If anything, it's a first-world problem.

By the way, the Utah hospital includes two alcohol wipes in their packages. Mylan does not. LOL. So, in the moment, when one is about to die due to anaphylaxis, the emergency responder can take a few seconds to "sterilize" the injection site.

By the way, it has been proven that a) there is no need to sterilize an injection site; and, b) alcohol swabs do NOT sterilize an injection site. The only time, generally speaking, where sterilization is needed is when donating blood and then for those who have donated blood note that the technician uses copious amount of disinfectant (usually povidone iodine) and swabs for several minutes with multiple cotton balls soaked in disinfectant held by forceps/tongs and holding the instrument with gloved hands. 

Correlation Between Gasoline Demand / Jobs; Are The Goal Posts Changing Now That The Obama Presidency Is Coming To An End? -- November 2, 2016

Updates

Later, 9:25 a.m. Central Time:

From the EIA today:

The consumption of U.S. finished motor gasoline reached a new high of 9.7 million barrels per day (b/d) in June 2016, surpassing the previous one-month high of 9.6 million b/d set in July 2007. U.S. gasoline consumption during summer 2016 (June through August) increased by 169,000 b/d, or 1.8%, relative to the same period in 2015.

The increase in gasoline consumption was slightly lower than the increase in driving, suggesting that fuel economy improvements slightly mitigated the increase. --- EIA

We didn't hit 10 million bopd but we came close.

Original Post

USA Today:

Businesses added 147,000 jobs in October, payroll processor ADP said Wednesday, possibly signaling the government this week will report a third straight month of disappointing employment gains.

Economists surveyed by Bloomberg expected ADP to report 165,000 job gains. They forecast the Labor Department on Friday will record 175,000 new jobs in the public and private sectors in the final employment report before the election.

Last night I posted the one metric that tells me most about the US economy: gasoline demand. In light of the jobs story today, you may want to take another look at the post on gasoline demand.

Remember the magic numbers:

First time claims, unemployment benefits: 400,000 (> 400,000: economic stagnation)

New jobs: 200,000 (< 200,000 new jobs: economic stagnation)

But this is very, very interesting. Now that the Obama presidency is coming to an end, the goal posts seem to be moving again.

Forever and ever, and under the George W Bush administration, the "magic" number for new jobs was 200,000/month. That was the number of new jobs that had to be added each month to maintain economic expansion. Under 200,000: indications of economic stagnation.

Then, sometime under the Obama administration, the number was silently changed:

Economists estimate the labor market needs to create about 125,000 jobs a month to keep the unemployment rate steady, though estimates vary -- Reuters.

I stuck with the 200,000 number.

By the way, going from 200,000 to 125,000 is not trivial; that's almost cutting the 200,000 number in half.

Now, note the USA Today story today: "Businesses added 147,000 jobs in October." That's what the story says. Reuters, during the Obama administration, said only 125,000 new jobs were needed to keep the unemployment rate steady -- so 147,000 should be fine under the Obama administration.  

But now that the Obama administration is coming to a close, 147,000 jobs is apparently a really bad number.

I wonder what the number will have to be under a Hillary administration? 100,000? A Trump administration? 500,000.

Whatever. 

US Exports Of Crude Oil And Petroleum Products -- November 2, 2016

Over at "Big Stories," I have a whole section on the US Energy Revolution. As China falters, the 21st century will be America's century. Had China not faltered, the race would have been between China and the US, but when all is said and done, the 21st century is going to be defined by access to dependable, affordable energy. One almost gets the feeling that the "jobs" that the US once lost to China are now moving back to the western hemisphere -- to Mexico. 

The graph below is staggering. From 1 million bopd in 2008 to almost 6 million bopd now. This is not trivial.

This may take a few moments to load depending on numerous factors, an embedded EIA chart:

Implications Of US Vs State Regulation Of Texas Pipelines -- RBN Energy -- November 2, 2016

First things first: tonight's World Series game will probably set records for number of folks watching. 

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The MDW: Breaking News Before Breaking News

Three minutes ago: yes, three minutes ago -- the Russian Northern Fleet is just south of the far west end of Crete.

This is so cool. This is why I love to blog. Last night I posted:

Russia's Northern Fleet, most recent update: the last ping was 20 hours ago, so not much change from previous report. The fleet's location 20 hours ago was at the east end of the strait separating Malta from Sicily -- so twenty hours ago, just slightly northeast of Malta, southeast of Sicily. This is about 6/11ths or about halfway between the Strait of Gibralter and Syria. The fleet has transited the Strait of Gibralter on October 26; they may have loitered for a day in the western Mediterranean. October 26 - October 31 (twenty hours ago): 5 days. So, about five more days to destination (Syria). Arriving about November 5, two or three days before US election?

Note: that "ping" was 20 hours earlier -- this is how far the Fleet traveled in the last 24 hours or so, from "Breaking News," early this morning:

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Politics

 
The two things that I find most interesting: tracking the Russian Northern Fleet and tracking the USC-Los Angeles Times poll -- neither of which amount to much in the big scheme of things, I suppose -- but it gives me something to do. Last night while watching the 6th game of the World Series I said I will be most interested in seeing this morning's poll. Wow, even I was surprised. To be honest, I really didn't think it would change that much, and to be really, really honest, I really thought the poll would have narrowed. Hmmmm:

A reader noted something I missed: although Hillary's polling has been lower in this poll, Trump has never been higher. His 47.8% today ties his previous high on September 19. We should probably go back and look at what was going on between September 12th and September 19th. He won't go over 50% in this poll, but if he does, it will be the headline story of they day.

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Back To The Bakken

Active rigs:

	11/2/2016	11/02/2015	11/02/2014	11/02/2013	11/02/2012
Active Rigs	34	69	193	181	187

RBN Energy: implications of US vs state regulation of Texas pipelines. And one might add, the implications of US vs state regulation of Texas pipelines under Hillary vs Trump. This might be a no-brainer. but let's see what RBN Energy has to say.