French Elections, Geopolitical Tensions/North Korea, Big Tech On Deck; POTUS Trump’s Tax Cut Plan Will Drive Wall Street & Sarepta Theraputics (SRPT) Stock Could Double, Or More Says Barron’s

French Elections, Geopolitical Tensions/North Korea, Big Tech On Deck; POTUS Trump’s Tax Cut Plan Will Drive Wall Street & Sarepta Theraputics (SRPT) Stock Could Double, Or More Says Barron’s

‘The French Connection:’ The Future Of The European Union May Well Be At Stake 

     Voters in France have been casting their ballots to decide which two candidates will emerge today; and, face each other in two weeks, May 7, 2017, and decide who will be the next president of France.  The two candidates that are expected to finish first/second are Ms. Marine LePen, considered the far-right candidate; and, Emmanuel Marcon, who is considered the center-left choice.  But, four candidates appear to be garnering 80 percent of the vote.  The other two viable candidates who are polling at or above the 20 percent level are: Center-Right, conservative candidate (considered a French ‘Margaret Thatcher) Francois Fillon; and, Jean-Luc Melenchon, the Far-Left darling, sometimes referred to as the French Bernie Sanders, who adored Fidel Castro and has an affinity with Communism.  There are seven additional candidates who collectively, are splitting the remaining 20 percent of the vote.

     Ms. LePen, who would be the first woman president of France, if she prevails in two weeks, has adopted a strong anti-immigration stance, and wants much tighter border controls, fearing that the country’s too lenient stance on immigration is allowing in militant Islamists and pro-ISIS terrorists and endangering the populace.  Last week’s terrorist attack in Paris validated much of Ms. LePen’s concerns and, she appears to have gained in popularity in its aftermath.  Ms. LePen is not a fan of the European Union (EU), and she has advocated that France return to using its own currency.  She also favors sticking with the 35 hour workweek, she wants to lower the retirement age to 60, and favors a tax on imports and foreign workers.

     Mr. Marcon, a 39 year-old newcomer, is a Euro-centrist, does not want a divorce from the EU, and is considered the status-quo candidate.

     Francois Fillon, has been dogged by a fake jobs scandal; but has been gaining ground heading into this weekend’s vote.  Considered a French Margaret Thatcher, Fillon, like Ms. LePen, favors a stronger anti-terror stance, tighter immigration and border controls; but, unlkie Ms. LePen, Fillon would raise the retirement age to 65, reduce public spending, lower income taxes and social security contributions, as well as do away with the wealth tax and the 35 hour work week.

     Far-Left candidate, Jean-Luc Melenchon, is an avowed socialist, an admirer of the late Fidel Castro, and would push France deeper into socialism and big government.

     We here in the U.S., should get our first indications of how the first round of presidential voting went around 2:00 – 2:30 pm EDT today.  A LePen victory would send shivers across all of Europe and no doubt be felt on Wall Street as well.  Her ascendancy would suggest that the populist wave that has swept the globe in the past eighteen months is not over.  And, her prominence and increased stature would up the potential for the collapse of the EU.  In the aftermath of Britain’s decision to leave the Euro, the general consensus seems to be that if one more country decides to leave, the entire EU would likely begin a death spiral and eventually be relegated to the dustbin of history.  But, in the short-term, a LePen victory in two weeks, may well spark a selloff in stocks, both in Europe and here at home; and, send gold and precious metals higher.

     Traders, investors, fund managers and others should carefully watch how the French election unfolds this evening; and, check out Wall Street futures tomorrow morning.  This uncertainty is the major reason I sold all of my equity positions on Friday, as I noted in my blog that day.  If the futures are deep in the red, then I will be an aggressive buyer at the open;  but, I won’t get all in, and instead leverage in if this appears to be more than a one-day selloff.  On the other hand, if the futures are strong in the green, then I will also selectively buy individual stocks, as we begin a heavy earnings week — highlighted by Thursday’s Big Tech day, which will see first quarter 2017 earnings and second quarter forecasts from:  Alphabet/Google, Intel, Amazon, and Microsoft.  These companies alone, account for 35 percent of the S&P 500 and will determine how we close out the week on Friday.  FYI, depending on what these companies report with respect to earnings/guidance, the stock price of these same companies have the following track record the day they report an earnings/forecast hit, or miss:  Google/Alphabet +/- 3%; Intel +/- 3.5%; Amazon +/- 4%, and Microsoft +/- 4.5 percent.  So, if one or more of these companies disappoint, then you will likely have an opportunity to buy them on sale; or, if you already own one or more, and they beat on the top/bottom line, then you will likely have an opportunity to bank some profits if you so choose.

     Outside of French elections, and a big S&P 500 and NASDAQ earnings week, ongoing tensions with North Korea, and the unveiling of POTUS tax cut proposal will also have an impact on stocks and precious metals.  The tax cut will be positive, and a military escalation with North Korea will be a headwind for stocks, and a tailwind for gold and precious metals.

Sarepta Theraputics (SRPT) Stock Could Double, Or More; Prime Takeover Candidate Barron’s Says

     Andrew Bary had a feature article in this weekend’s (April 22, 2017) Barron’s, about a stock/company I’ve owned shares off and on, for over a decade.  The pundits without credentials, who constantly harp on the sometimes excessive, or outrageous price of new drugs, fail to acknowledge, or appreciate the fact that it can take companies like Sarepta (SRPT) a decade or more, and lots of venture capital to eventually bring a revolutionary new drug to market.  Artificial, government-imposed drug prices will KILL the goose that laid the golden egg; and, cripple the innovative pharmaceutical industry that has been the envy of the world; and, brought us new drugs that have vastly improved our quality of life.  But, I digress.

     Mr. Bary writes that “Biotechnology stocks often suffer after the launch of new drugs, when initial sales don’t measure up to investor’s hopes at the time of regulatory approval. That has been the case with Sarepta Theraputics (SRPT), whose shares at about $32, are back to where they were last September, before the Food and Drug Administration (FDA) granted accelerated approval for the company’s drug — eteplirsen – for Duchenne Muscular Dystrophy (DMD)”, Mr. Bary wrote.  “The fatal, inherited, muscle-wasting disorder, affects boys; putting them in wheelchairs by their early teens, and leads to heart or lung problems by their 20s.  The shares peaked at $63 per share,” [last year] after the company received FDA approval.

     You can read Mr. Bary’s entire article in this weekend’s Barron’s; but, he adds that “SRPT [stock] looks appealing because there’s a good chance that sales of the drug, Exondys 51 [formally eteplirsen], will ramp up this year, and 2018,” Mr. Bary wrote.  “There are several things going for it.  It’s the only FDA-approved drug for DMD.  Insurance companies seem to be coming around, sometimes grudgingly, to paying for the drug, which can cost $300,000 annually per patient.  The price, while steep,” Mr. Bary wrote, “is in line with other pharmaceuticals targeting rare diseases” Sarepta is a show-me story, and that’s what creates the opportunity,” said Christopher Marai, an analyst at Nomura/Instinet, who has a buy rating on the stock; and, an $84 price target. The stock will start to work, as the sales numbers come out in line [with] or above consensus.”

     “Some Wall Street analysts are similarly upbeat,” Mr. Bary notes.  “The bulls contend Exondys 51 will generate $400 million or more of U.S. sales by 2019, and $1 billion globally by the early 2020s.  This assumes that European regulators will allow the drug to be marketed there.  A decision is expected by early 2018.”

     Mr. Bary ends his article, concluding: “Sarepta offers an attractive play on a biotech drug with large sales potential; and, less risk following FDA approval last year.”

     I intend to buy back into SRPT, perhaps as early as tomorrow (Mon.) morning at 0800 in pre-market trading.  I will first look at France’s presidential election vote and what U.S. stock futures are showing.  Regardless, I will be buying back into SRPT, if not tomorrow, then in the coming days — and not weeks.  Having said that, there is no such thing — as a sure thing when investing in stocks, or much else for that matter.  So, do your own due diligence, understand your risk tolerance and time horizon before deciding whether or not to buy shares of SRPT.  Good luck, whatever you decide.  V/R, RCP,  

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