Swiss Shock And Awe Inspires The Gold Bugs; 3 Bio-Pharma Stocks ‘Under The Radar’

Swiss Shock And Awe Inspires The Gold Bugs; 3 Bio-Pharma Stocks ‘Under The Radar’

This morning’s decision by the Swiss Central Bank, “to break the Franc away from its set value against the Euro. is proof that when constant “meddling” by central banks ends — “something noisy and sudden happens,” said James Grant, Founder of the long-running, Grant’s Interest Rate Observer, in remarks to CNBC’s Closing Bell this afternoon. “It is a day to take measure of our infatuation with central banks,” and quantitative easing.

And, Mr. Grant has been prescient with his forecast. Last September, Mr. Grant predicted that “Switzerland would be forced to permit the Swiss franc to appreciate; and thus, “to enrich the holders of low-priced, three-year call options on the Swiss/Euro exchange rate. “What today underscores,” he warned, “is that they, the monetary mandarins, the powers that be, can attempt to suppress volatility. They can attempt to raise up certain asset values; but, they can’t do these things forever.” Mr. Grant went on to warn that “the artificial suppression of interest rates, and exchange rates, brings about contradictions and distortions — within the affected economies. It will ultimately force the hands of the authorities to step back — and, allow nature to take its course.”

“Here in the United States,” Mr. Grant warned, trouble may be coming, “thanks to the Federal Reserve’s attempt to raise asset values — to stimulate spending and boost the economy. What if the earning power of the assets that the Fed has lifted…fail to keep up with prices posted on the New York Stock Exchange? That’s also a form for trouble we may look forward to.”

What The Swiss Franc Shock Means To The Stock Market

Marc Chandler, Global Head of Markets Strategy at Brown Brothers Harriman, told CNBC;s “Squawk Box” this morning that the “Swiss move was an attempt to fight deflation. Before 2011, when the Central Bank implemented the cap — it tried to buy foreign bonds as a type of quantitative easing. That strategy failed, so the Swiss enforced the currency cap,” he said. “Now, they’re giving up on it. The force at work here, is not about the Euro Zone, though I agree that anticipation of sovereign bond buying in the Euro Zone in the next two meetings…helped compel the Central Bank to abandon it’s previous strategy. The key here,” he added, “is that oil prices, commodity prices have collapsed. Many countries are fighting with deflation.”

Mr. Chandler expects the U.S. Bond market to rally, with yields continuing to fall; and added that “retail and institutional investors have little choice but to move into stocks {U.S.].

Meanwhile, Scott Brown, Chief Economist at Raymond James, told CNBC’s “Squawk On The Street,” this afternoon, that “the Euro Zone has now entered a more dangerous phase of its crisis. Fiscal policy would be effective,” he argued; but, “it is dead politically, leaving quantitative easing as the ECB’s only weapon. A couple of years ago, it was just about the survivability of the monetary union, and now — it’s really about a battle against the possibility of deflation, or at least an extended period of stagflation.”

Investors Fleeing To Safety — Fixed Income, Gold, High-Yield Corporate Bonds

There is a lot of anxiety out there among the institutional and retail investor communities, as oil and copper are collapsing, Central Banks may not have the kind of “control” that some had hoped, Europe, Japan, Russia and Venezuela are all in a real mess, and the Greeks may be set to elect a left-wing, socialist Parliament on the 25th, a move which could ultimately presage their exit from the Euro. It is enough of a concern to have sent investors fleeing to “safety” as fixed income, high-end corporate bonds, and precious metals are getting a boost. Gold had is best one-day rise in four months today; rising $28, or more than 2 percent to $1,264.80. I had been bearish on gold; but, it would seem the table is set for a probable healthy run to the upside and a take out of $1,300 per ounce seems almost inevitable in the very short term. I put out a note two Sunday’s ago on where to look in fixed income and that note can be found in the markets category on my blog.

Three ‘Under The Radar’ Biio-Pharma’ Picks By R.W. Baird

Chris Raymond, Senior Bio-Tech/Pharma Analyst at R.W. Baird, was interviewed on CNBC’s “Fast Money,” this evening and he had three “under the radar bio-tech/bio-pharma stocks to consider. He considers the market to be in “A Golden Age For Bio-Tech,” and believes this sector, which was hot in 2014, is likely to continue to out-perform in 2015. His three picks are: 1) Ultragenyx (RARE), which he says has 4 drugs in the ‘pipeline,’ and describes them as “a single, a double, and one home-run.” He added that one of the company’s drug had been pulled forward by the FDA by two years, and, he said the company could go to commercialization in 2016. A second company was Amag Pharma (AMAG) and the third was Synageva Phara. Do your homework; and, good luck. All for now. V/R, RCP

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