Today's big stories

Pharmaceutical giant AstraZeneca’s reportedly interested in merging with en vogue biotech Gilead
Our analysts show you how to make decent returns without timing the market to perfection – Read in the Finimize App
The world’s major oil producers agreed to extend their production cuts by another month

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Fusion Ha

What’s Going On Here?

Reports surfaced over the weekend that AstraZeneca – the UK's biggest pharmaceutical company – is looking to join forces with US biotech Gilead in a potential merger.

What Does This Mean?

Most of the time, AstraZeneca’s focus is on cancer treatments and cardiovascular drugs. But the pandemic has prompted the $140 billion company to look into whether any of its existing medications can help treat coronavirus, as well as pushed it to help developers at the University of Oxford manufacture their own potential vaccine.

Gilead – which primarily specializes in HIV medication – has developed a drug that instead might tackle coronavirus head on. And as that drug’s been going through clinical trials to prove it works – while also being approved for emergency use in several countries – investors have been watching carefully hoping to profit from any progress.

Why Should I Care?

For markets: Money isn’t everything.
This deal would be the largest pharmaceutical merger ever: the resulting company could be worth at least $240 billion, with annual revenues of $46 billion and profits of $19 billion (tweet this). And once you account for synergies – eliminated costs that reduce outgoings by 20-25% in most biotech-pharma mergers – profits will probably be even higher. But investors don’t seem convinced: Gilead’s stock barely moved on Monday, which could be because major link-ups are often fraught with process clashes – and any deal could detract from the combined company’s core business.

The bigger picture: Copycats.
The purchase of biotech firms by pharmaceutical companies has been commonplace recently, as bigger companies try to add more products to their portfolios without incurring the high costs of development. But there might be some under-the-radar benefits too: “tax arbitrage”, for example – though it's already caused a few attempted cross-border mergers to be blocked by regulators. If Astra-Gilead becomes a reality, it might be met with similar concerns over whether the US or UK would have control over any potential coronavirus cure, which may ultimately see the deal axed.

Recommended: How to invest in a potential vaccine.

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Timing Markets Isn’t Everything

What’s Going On Here?

Well-timed selling and buying of US stocks would have doubled your money in 2020, but it’s reassuring to know that a few super-simple strategies have also delivered greater than 10% returns.

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Look, we’re not so proud as to think we’re the only great newsletter out there. Turns out, there’s at least one more of them.

It’s called Diary of a Fund Manager, and it’s a weekly behind-the-scenes look at all things investing. Each week, you’ll get a better feel for what’s going on in the markets and how current affairs are affecting them, giving you a broader, more nuanced understanding of how to make smart moves with your money.

And who’s the fund manager in question? Why, it’s David Miller from Quilter Cheviot, of course. David’s been in the industry for years, building up loads of experience both in managing client money and running multi-asset funds.

Our analysts like it a lot, so go ahead and sign up for free. Just don’t go forgetting about us, okay?

Here’s a disclaimer: investors should remember that the value of investments, and the income from them, can go down as well as up and that past performance is no guarantee of future return. You may not recover what you invest.

3/3

Best Of Frenemies

What’s Going On Here?

The world’s largest group of oil-producing nations and their allies don’t always see eye to eye, but look at ‘em now: OPEC+ agreed to extend its production cuts until the end of July.

What Does This Mean?

OPEC+ agreed to lower oil production back in April after the price of the slippery broth fell to record lows: coronavirus-driven collapsing global demand and a Saudi-Russian price war can do that to a commodity. The agreement was only supposed to last till the end of June, but over the weekend, the group decided to stick with it for another month.

OPEC+ is likely hoping demand for oil will start to rise again as the global economy begins to reopen, and that a still-low supply will result in higher oil prices that’ll benefit all major oil producers. Then again, the effect might not be as pronounced as they’d like: OPEC and its allies haven’t cut as much as they've promised they would after similar past agreements, and history repeated itself last month.

Why Should I Care?

For markets: No-PEC.
Some analysts now think oil’s price could rise to $50 in pretty short order given the extended production cuts. But on Monday, its price – which began the day at around $42 – actually fell by about 3%. Most investors, it seemed, were indifferent about the OPEC+ update – or maybe they just saw oil major BP’s announcement that it would cut 15% of its workers by the end of this year as a damning indictment of where the oil price might go next.

The bigger picture: About that recovery…
The oil price generally rises and falls alongside global economic growth expectations because if there’s more going on – manufacturing, transport, and the like – more of the obsidian nectar is needed. But its investors are being dragged back and forth at the moment: China’s economy is recovering from coronavirus, sure, but Germany revealed on Monday that April’s drop in industrial production was the worst on record.

Take action: How to profit from investing in the oil industry.

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💬 Quote of the day

“Never be limited by other people’s limited imaginations.”

– Mae Jemison (an American engineer, physician, and former NASA astronaut)

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📖 Dear Diary…

We don’t know about you, but our diaries were nowhere near as entertaining and informative as Diary of a Fund Manager, a free weekly newsletter from Quilter Cheviot’s David Miller.

Ours were mostly about what a dreamboat Nick Carter was. But David’s is a weekly rundown of the latest market news, as well as how you can tweak your strategies to keep your investments performing well when markets stutter. That’s definitely more important than Backstreet Boys in times like these.

You’re in safe hands too. David Miller has years of experience both on the ground – managing client money directly – and as the brain behind major multi-asset funds. That’s exactly the sort of person you ought to be hearing from each week.

David’s newsletter is free, so check it out for yourself. He promises not to tell you who he’s crushing on at the moment.

Here’s a disclaimer: investors should remember that the value of investments, and the income from them, can go down as well as up and that past performance is no guarantee of future return. You may not recover what you invest.

🌏 Finimize Community

😇 Great events, great people

Tonight, some energy and oil experts will be taking time out of their busy schedules to chat about the state of the industry with community host Kanuj Gupta, who also has quite a lot on his plate. What a nice bunch of people.

🇨🇦 Canada: The State of Crude Oil & the Canadian Economy – 6.30pm EST, June 9th
🇨🇦 Canada: Sizing Up Your Investing Biases – 6pm EST, June 10th
🇭🇰 Hong Kong: The Big Data Revolution – 9pm Hong Kong Time, June 11th
🇫🇷 France: The Future of Blockchain & Cryptocurrency – 6.30pm CET, June 17th

📚 What we're reading

That’s a lot of cocaine (Jalopnik)
Write what you know, they say (Harper’s)
Put your post-lockdown haircut to good use (New Atlas)

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Finimize - 💉 The 240 billion coronavirus cure

Today's big stories

Fusion Ha

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Timing Markets Isn’t Everything

🤫 Love a bit of healthy competition

Here’s a disclaimer: investors should remember that the value of investments, and the income from them, can go down as well as up and that past performance is no guarantee of future return. You may not recover what you invest.

Best Of Frenemies

What’s Going On Here?

What Does This Mean?

Why Should I Care?

📖 Dear Diary…

Here’s a disclaimer: investors should remember that the value of investments, and the income from them, can go down as well as up and that past performance is no guarantee of future return. You may not recover what you invest.

😇 Great events, great people

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