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An Update on the US Generic Drug Pricing Dilemma

In August 2017, we wrote a piece about pricing pressure in the US generic drugs market. We focused on the acceleration in generic drug approvals, which is only one of the factors in today's deflationary environment. At the time, we did not believe we would see pricing equilibrium in the near-term under the current regulatory and business conditions, and predicted that prices for generic drugs would continue to decline until manufacturers gained negotiating leverage.

Posted by Daeil Cha on Aug 23, 2018 3:47:32 PM

Topics: From the Desk of Daeil Cha, Pharmaceutical

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Following the Fund Flows in International Equity

For all those data geeks out there like us, analyzing fund flow data can be an incredibly interesting and revealing exercise. So much so, that we devoted another blog to the topic. Regular readers might have caught last week’s blog in which we highlighted the massive divergence of YTD net flows between International Equity and U.S. Equity ($60.7 billion of inflows vs. -$58 billion of outflows, respectively, for mutual funds, both active and passive, through Q2). The data appeared to suggest that U.S. equity investors were diversifying their domestic exposure overseas. If that is true, then where is the money going? Where are investors seeing opportunity in the international markets?

Posted by Richard Pell on Aug 16, 2018 3:44:09 PM

Topics: From the Desk of Richard Pell, International Equity

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YTD Equity Fund Flows: International Dominates U.S.

Throughout the first half of 2018, we have seen a massive divergence in fund flows as International Equity has dominated U.S. Equity. As we can see in the table below, International Equity has attracted $60 billion in positive net flows YTD across all mutual funds, both active and passive strategies; U.S. Equity on the other hand, has lost an almost identical amount, posting outflows of -$58 billion. On the surface, it appears that many U.S. investors have reallocated some of their domestic equity exposure overseas.

Posted by Richard Pell on Aug 9, 2018 4:25:10 PM

Topics: From the Desk of Richard Pell, International Equity

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Small Win for Protecting U.S. Cell Phone Users

Remember when Strava, the fitness tracking app, gave away the location of secret U.S. army bases in Afghanistan and Syria? We wrote about it back in February. It was an embarrassing and dangerous leak of sensitive customer data. It also highlighted the intrusion and potential abuse of location-based cell phone data.

Well, good news for cell phone users in the United States – they got a couple of small wins:

Posted by Harry Polishook on Aug 2, 2018 3:07:27 PM

Topics: From the Desk of Harry Polishook, International Equity

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Yield Curve Inversion: A Big Deal for Equity Markets?

There has been a lot of focus recently on the yield curve. For the purposes of this blog, we define it as the spread between 10-year US treasury yields and 2-year US treasuries. 

Today it is tracking at ~30 bps, the tightest it’s been since the Financial Crisis.

One would typically expect a positive yield spread since a 10-year instrument has higher risk than a 2-year instrument. For example, investors should demand a premium yield for 10-years vs 2-years. Historically, this spread has averaged 100bps, with a range of roughly -100bps to +300 bps (see chart below).

Posted by Luis Ahn on Jul 24, 2018 3:36:57 PM

Topics: From the Desk of Luis Ahn, International Equity

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China's Push Into Cutting-Edge Gene Editing Technology

If you haven't heard, designer babies may be on the horizon. Thanks to CRISPR-Cas9 technology ("Clustered Regularly Interspaced Short Palindromic Repeats"), some scientists believe they can edit human genes for the purposes of treating diseases. 

Posted by Daeil Cha on Jul 18, 2018 1:39:41 PM

Topics: From the Desk of Daeil Cha, China, Biotechnology

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MiFID II Seems to be Succeeding in Increasing Transparency

The new regulatory requirement of MiFID II has been in effect for six months and it appears to be working. This recent Bloomberg article really caught our attention as it highlights an astonishing +70% increase in the reported trading volumes for European ETFs.

Posted by Elyse Waldinger on Jul 12, 2018 2:50:30 PM

Topics: International Equity, From the Desk of Elyse Waldinger

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2018 Mid-Year Blog Recap

We sincerely appreciate each of you for subscribing and reading our thoughts on the market. We hope this information has been useful.

Below, we have highlighted our top 3 most popular blog posts from the first half of 2018. Enjoy!

Regards,

- The R Squared Team

Posted by Richard Pell on Jul 3, 2018 10:08:30 AM

Topics: From the Desk of Richard Pell

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World Cup Fever and Equity Alpha

There have been numerous academic studies on the economic benefits of hosting the World Cup. A few, out of a long list of studies, can be found here: 

 

Infrastructure spending, increased tourism (both short- and long-term), higher labor/civic morale, and increased profile of the host country are often cited as the benefits. On the other hand, the cost of building (and financing) the stadiums, crowding out of private investment, congestion, and the cost of security are some potential disadvantages.

But as international equity investors, we are more focused on the simple question:

what about the impact on equity prices?

Posted by Luis Ahn on Jun 28, 2018 10:17:42 AM

Topics: From the Desk of Luis Ahn, International Equity

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Targeted Advertising Abuse

This old chestnut is variably attributed to Henry Ford, John Wanamaker, J.C. Penny, William Hesketh Lever, amongst others. Each one is a great symbol of consumerism, but we’ll never know which or if any of them really said it. 

Posted by Harry Polishook on Jun 21, 2018 4:52:28 PM

Topics: From the Desk of Harry Polishook, International Equity

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