Thus far, 2016 has been the year of biotechnology stocks, which have been in the news for various reasons and most of them were good. 

There was a time when the knock on biotechnology was the fact that the vast majority of these companies didn’t make any money.  This continues to be the case, but something interesting is happening that’s making that less relevant.

1. Major pharmaceutical companies have thin drug pipelines and aging blockbusters on the market.
2. Humans are living longer, but we are also less healthy in many ways. 

Case in point: Tobira Therapeutics (TBRA) saw its shares rocket on Tuesday by 550% on news that Allergan (AGN) is buying the company in a deal for $28.35 per share in cash, and it could become $49.84 per share upon reaching certain regulatory and commercial milestones. The company has two treatments in Phase II testing for non-alcoholic statohepatitis, which is the last chance to reverse damage to the liver before it becomes cirrhosis. 

I have talked about this epidemic in the past, and it is simply the result of Americans becoming fatter. 

So far this year, the three biggest winners in the market are all biotechnology stocks. By the same token, the top losers are also in the sector, including last week’s collapse of Novavax’s (NVAX) share price. 

On that note, I continue to think that Intercept Pharmaceuticals (ICPT) will one day see its shares up several hundred percent in a single session but until that happens, it’s a high-risk idea.

Big news after the close on Tuesday

• FedEx (FDX), often seen as an economic proxy, beat Wall Street consensus on revenue and earnings and management hiked guidance for the full year.
• Adobe (ABDE) beat on the top and bottom line, riding a 29% surge in its Digital Media where its cloud business is booming
• Page Stuart Varney of (Varney & Co.) because Microsoft (MSFT) is increasing its share buyback program to $40 billion.
• And crude oil is up on a draw of 7.5 million shares and hopes of an OPEC output freeze next week in Algeria.  

I have received a lot of calls on buying the oil dip and I’m eager as well.  Ideally, investors can buy select names into the Energy Information Administration (EIA) and the Federal Open Market Committee (FOMC) news, but we are loading up with crude oil closing above $50.00.

Today’s Session

While all eyes are on the Federal Reserve, the central bank making news is the Bank of Japan and their audacious attempt to control long term rates.  The bank is focused on keeping the ten year government bond rate near zero forever.   Experts say it can’t be done, and for a central bank that has tried every trick in the book, and even invented a few, it would seem like a long shot.

Unlike our central bank, the BOJ does own equities via ETFs and now is a top ten shareholder in 90% of the Nikkei 225.  I’m not sure if their new scheme alters this strategy.  I doubt it as those purchases have largely increased over the last couple of years.   In light of this news, Yellen & Co have less pressure to hike rates.