The G7 and Other Sunday Musings

The communique came out and as expected with not much of substance: G7 upbeat on global economy, prods China. The G7 once again skirted the issue of the yen-carry trade issue, making it likely that we'll see further downward pressure on the Yen, a further rise in the Euro and a further decline in the Dollar next week. $1.3670 is the all time Euro high vs the dollar - looming ever larger.

But before you put in an order to sell dollars and buy Euros on Sunday night, a barrage of economic data lies ahead which will no doubt pull the Forex to and fro. Monday alone features Empire Manufacturing, retail sales, business inventories and a housing market index report. Tuesday, the Consumer Price Index for March is expected to show a core gain of .2%. Should this CPI come through higher than expected that could certainly put the dollar sellers in temporary check as the 'stag-flation' worries grow. I still don't see how the Fed can lift rates in the face of the housing market collapse, but with these 'official' inflation numbers showing problems with prices, a token quarter point increase wouldn't be a total shocker though I still lean 95% toward believing a housing sparked dislocation will force the Fed to ease before the end of the year. Housing starts and industrial production data also be released Tuesday. Thursday features the release of jobless claims, Philly Fed and leading indicators.

Should we short the cell phone stocks (tongue somewhat in cheek)? Here's a blaring headline from the Drudge Report: ARE CELL PHONES WIPING OUT OUR BEES?

In the biotech realm, there are some interesting headlines this weekend surrounding Hepatitis:

From Vertex (VRTX): Vertex drug may shorten hepatitis C treatment-study. The problem here is dropout rate which went from 9% in December to 11% this time around. I have a 5 rules for buying FDA plays:

1. The drug must be safe and tolerable.
2. The treatment must be effective.
3. There should be blockbuster potential.
4. Bonus points if the drug has 'gold standard', life extending ability.
5. Re-read rule number-1.

Vertex may find trouble with rules #1 and #5. We'll see what happens Monday morning and whether this is a repeat of the December. 13 type 7% drop, or if the stock can run on the efficacy data points. Options trading in VRTX was brisk on Friday as everyone tries to find the next Dendreon (DNDN). This isn't it and that's a shame since hep-C becomes a ravaging killer disease. I have a short list of DNDN like candidates and one of these days, when I have time to do a detailed post, I will do one. There are some amazing things going on out there. Oh, one other thing: most analysts love VRTX - certainly a good contrary indicator for those of the "looking for the next DNDN mindset" where pretty much all analysts still hate the stock ever after its 5-folk climb. That could be rule #6: Analysts universally hate the stock.

Human Genome (HGSI): Human Genome Sciences Reports Positive Interim Results of Phase 2b Trial of Albuferon(R). They've got something interesting here, but are a long way off.

Bristol Meyers Squibb (BMY): Human Genome Sciences Reports Positive Interim Results of Phase 2b Trial of Albuferon(R).

Adobe (ADBE) hasn't gotten much respect from the market lately, but Barron's sure gives it respect in this week's issue. The upshot of the Barron's piece is that ADBE is poised to rise as it develops and rolls out software to exploit the rapid proliferation of web video, graphics and websites. I am champing at the bit to order CS3.

Disclosure: long MOT, DNDN, Euro Futures