Its name says it all: Covid-19, a disease that began in 2019. And although it didn't hit this country until 2020, still it's starting to show its age. We saw that all yesterday when one of the principal manufacturers for the Covid Vaccine, Moderna, reported their latest results.
Moderna is the perfect proxy for anyone who wants to follow the progress of the Covid disease. Moderna began operation only ten years ago. And the company spent most of that time in pure research before coming public.
Its partner Vax makers, Pfizer and Johnson and Johnson, are so large that the vaccine makes little difference in their bottom lines. But for Moderna, the vaccine is the whole shebang.
As I leafed through the Moderna quarterly report, everything looked as I expected: sales and revenue higher, earnings higher. It seems just about right until you get to the extraordinary items. Things that the company didn't expect.
The first item that jumped out at me was a half-billion dollar write-off. That's a significant hit for anyone, especially for a company with only three good earnings years. New companies usually watch their P's & Q's pretty closely. So it was a real surprise to see a write-off of this magnitude.
The cause of this debacle? Moderna had inventory that expired. To put it another way, these were vaccines Moderna had produced but sat on the shelf so long that they went past their "use by" date. And the company had to destroy them.
Let's think about this. So Moderna isn't selling their vaccine to people like you and me. They are selling the vaccines to governments or government agencies like the World Health Organization. I'm pretty sure that the US Government, for example, remains their number one customer.
Imagine then, the US Government calls and says they want to buy 100 million doses. For reference, the Biden Administration has just purchased 66 million doses of the Omicron variant of Covid 19 Vaccine from Moderna, with an option to purchase up to 300 million more. And, as I understand it, each 100 million doses of the Moderna vaccine costs 1.5 billion, or $15 a pop.
So rough math says that Moderna destroyed about 33 million doses last year. Doses that they could not sell to the Government. Amounts the Government could not use.
We now know that the European Union and Covax, a consortium of smaller countries, have cut back on their orders. And there are indications that fewer vaccines are being administered here in the United States. Collectively Moderna customers have canceled $181 million in existing orders.
Put that all together, and you have a situation where Moderna has to cut back on its manufacturing line. They just wrote off a $131 million lease for a manufacturing facility that they will not now need.
What I found so fascinating about Moderna's earnings report is how different a picture it paints from what we hear from the media. It sounds like the press, and selected political leaders are starting to beat the drum in calling for more restrictive actions to fight Covid.
As you know, President Biden has recently come down with Covid. This news has once more brought the disease front and center. New York and California have recommended wearing masks again, as has the CDC, for public transportation.
Fall and winter are coming, the traditional time when respiratory diseases are the most prevalent.
And yet we see, in the actual administration of the vaccine, Moderna is starting to see some slack. They're cutting back from production levels they thought they had by now. Inventory destroyed, leased production facility abandoned.
And this perfectly comports with what people are telling me. Most are over Covid now. They are tired of it. The so-called safety and efficacy that Dr. Fauci drummed into our heads are coming into question. It's been nearly three long years of losing freedoms that we hold dear.
If it is so safe, why are there two million adverse effects on the VAERS (Vaccine Adverse Events Reporting System)?
Maybe I'll pass on all these vaccines, masks, and lock-down and go back to living my life like I used to.
After all, today is 2022, and Covid is so 2019.
The New York Branch of the Federal Reserve is reporting that consumer credit cards balances soared by over $300 billion in the second quarter of this year. The highest rate in 23 years, as consumers are being squeezed by inflation. Inflation that has had its genesis primarily in energy costs and foods.
As you and I have discussed before, the average American is finding it increasingly more difficult to meet these soaring gas prices primarily. And that in turn is depressing discretionary spending. The squeeze is now impacting consumer's cash flow, as we're having to tap our credit cards just to make ends meet.
This doesn't look good for future retail sales.
Overnight we had four measures of Purchasing Managers for the Construction Industry. Not a widely followed measure, it is none the less interesting to note that, these four countries all have construction levels that are declining. Reporting last night were Germany, France, Italy and Great Britain. And all four are reporting that real estate construction is very soft.
Now in just a few minutes we will have the latest report on our country's Balance of Trade. You will no doubt hear the press gush over the fact that this imbalance is expected to be only (quote unquote) 80 Billion or so. Just remember, up until the last 2 years, this country never had a trade deficit of 60 billion, let alone 80. America's balance of trade is simply a train wreck.
Over 500 companies will report their latest quarterly earnings today, Leading the way so far have been Eli Lilly and Toyota Motors, both trading lower on their results. While Alli Baba, Conoco Phillips and Cigna Insurance shares are all trading higher.