The 800 pound long bond gorilla remains in the room.

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Today’s links

My latest FX Update - focusing especially on the big blowout in long yields.

The incredible election maths for the UK if the election were held today - is Reform the government in waiting?

A helpful listener passed along a recent Australia in the World podcast episode with an interview of Brad Satser, talking Trump tariff,s, China and “Australia’s position in a fraying economic order”. Australia straddles the most difficult of fault-lines in whatever new world order is emerging, with so much of its economy dependent traditionally on Chinese demand (commodities from iron ore and coking coal to foodstuffs, etc.) while its historic security and cultural orientation is very much with the UK and US.

A company I have never heard of before that was a noted addition to Stanley Druckenmiller’s Duquesne family office fund in Q2 was Viking Therapeutics, a biotech company that IPO’ed back in 2015 and has yet to post a single cent of revenue, which is expected to come rolling in somewhere in 2027 if all goes as hoped. The company’s pipeline looks interesting, especially as a possible player in GLP-1 medications in pill form. Here’s a ChatGPT summary of the company. As the Motley Fool article notes, Druck’s move into this company could be about protecting existing investments in obesity care, or as an asymmetric upside play if the company becomes a takeover candidate or even as a go-it-alone play if they get FDA approval for one or more of their drugs - though the base case rests on the GLP-1 pill. More below. I was surprised to learn that a couple of other big players went not just years, but decades before becoming consistently profitable companies as go-it-along pharma companies - Regeneron and Vertex Pharmaceuticals.

Chart of the Day - Viking Therapeutics (VKTX)

The company (as noted above one that legendary trader and investor Stanley Druckenmiller’s family office fund added to its positions in Q2) has a market cap of USD 3.1 billion after its recent 42% single-day drop after its GLP-1 obesity pill, which if approved would eventually compete head-to-head with future pill-form obesity treatments from Eli Lilly and Novo Nordisk, saw results some found less impressive than hoped. It rocketed from lows near 2 dollars a share in late 2022 to nearly 100 dollars a share by early 2024 on the hype around obesity treatment made available by those two companies, a hype that has since faded as the pace of growth in the injectable GLP-1 market has disappointed. The company has other drugs more advanced in the US approval process with smaller addressable markets.