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anuvrat1

Is it true? I looked at Lilly adjacent companies, and they all share the drop.

https://finance.yahoo.com/chart/JNJ

https://finance.yahoo.com/chart/MRK

https://finance.yahoo.com/chart/AMGN

https://finance.yahoo.com/chart/BMY

https://finance.yahoo.com/chart/GSK

except https://finance.yahoo.com/chart/ABT probably they were doing something which others weren't

https://finance.yahoo.com/chart/%5ESP500-352020 S&P 500 Pharmaceuticals

I think this much evidence is enough to deduce that, "No, fake account didn't wipe out $20B in market cap, rather it was a broad market trend"

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The irony is that there is a very high chance the drop was caused by fake information, not from the Twitter accounts, but rather from the US government's BLS.

You see, back in October, they decided that inflation is too high so it's time to tweak the formula so it doesn't look so bad. Energy would be too obvious, but health insurance is the perfect component to tweak![1].

So what happened in this week's CPI print? Well inflation still went up - a crushing 0.4% Month over Month, or 7.7% Year over Year, but because inflation has been so bad, this rate of inflation is an improvement[2]. The market was quite pleased.

But what about healthcare inflation? Well it made a 50 year record by reporting -0.6%. That's right, according to the BLS, healthcare costs went down 0.6% MoM. To anyone with healthcare insurance or medical costs, they know this is an absolutely fake number. Even among analysts that work the sector, they knew the number was going to be suppressed, but not by this much.

But what would a not-very-savvy investor do when he sees the CPI print 0.4% this month, and their healthcare sector investments print -0.6%? Why - and this is the technical term - shit your pants of course. I mean the sector is losing 1% per month to inflation. Sell, sell, sell! I need that money in sectors that are keeping up, like literally everything else.

So let's give it up for the US government, tweaking the CPI calculation once more, to under-report real inflation and screw over everyone else. It's a time-longed tradition going as far back as fiat currencies. And kudos to the mainstream media apparatus for using the event to smear their ideological enemies instead of broaching the subject with a modicum of thinking.

And if you're curious, here's the best an army of government academics can get you when you need healthcare CPI to drop: https://www.bls.gov/cpi/factsheets/medical-care.htm Scroll down to "Health Insurance".

---

[1] https://www.bloomberg.com/news/articles/2022-10-03/why-healt...

[2] https://www.bls.gov/news.release/cpi.nr0.htm

This sounds too rational.

I think we should blame Elon Musk.

> That's right, according to the BLS, healthcare costs went down 0.6% MoM. To anyone with healthcare insurance or medical costs, they know this is an absolutely fake number.

I have health insurance and medical costs, but my healthcare costs definitely haven't increased MoM in the last year or so. In real terms my medical costs have decreased; in nominal terms they're about the same.

You're just one data point, though. I just got a letter in the mail a couple weeks ago telling me my monthly health insurance premium was going up.

This doesn’t necessarily contradict what I’ve said: if inflation is around 7%, my premium can increase by anything less than that and still decrease in real terms.

Mine didn’t increase, but if it had increased by a point or two I wouldn’t have considered that meaningful.

Yes. I was surprised to find out during open enrollment this year that my premium costs would stay FLAT! First time in years this has been the case.

It's not correct to say 'inflation went up'. While inflation was not 0 and prices went up, inflation went down.

How do you define inflation? It went up, but slower.

> It went up, but slower.

Prices went up. Inflation is the rate of increase in prices. So slower increase means lower inflation. No increase is 0% inflation, decrease is deflation / negative inflation.

Is the tweak this Medicare Part D pricing change?

"""

Prior to April 2021, part of the retained earnings calculation included premiums and benefits data from a national nonprofit health insurance carrier. This data was replaced by National Association of Insurance Commissioners (NAIC).

In October 2022, the retained earnings calculation began including premium and benefit expenditures for Medicare Part D. Previously, these Medicare Part D expenditures were not included.

"""

The tweet went out Thursday during trading hours and the stock went up. Then Friday the entire large cap healthcare sector got crushed. Here’s why…

https://archive.ph/JNWKu

Spoiler alert: it had absolutely nothing to do with a fake tweet

Free insulin or just more scrutiny on insulin would potentially hurt the whole sector.

Or who knows, just effective parody of the drug price grift could make the value of all of them go down if they think they could be the next target of ridicule, even if they aren't involved with insulin they probably have something at a crazy marked up price that drives lots of their profits.

https://twitter.com/quantian1/status/1591149510168039426

But - no checkmark so probably fake!

Those stocks are all going to be correlated though. If one thinks LLY is going to drop because of insulin costs, it makes a ton of sense that other pharma companies would also drop at the same time.

You’re conflating correlation with an unknown externality.

Instead, we have a very public (fake) event that would have been major news if it were true.

It would be quite the coincidence if LLY stock started to drop due to an external report at the exact same time as a fake report of Lilly making insulin free. If that were to happen, of course other pharma companies stocks would also start shifting, either through automated trading or in response to a big market move from Lilly (which was false).

I see more than enough evidence to think that the entire shift was due to the fake Tweet. At the very least, that’s a reasonable conclusion.

We’ll never know for sure, because now with more scrutiny/publicity on the insulin market, that alone could keep pushing LLY stock down.

The only thing for certain is that this is bad news for the new Twitter.

Other companies that also make insulin?

Healthcare stocks tend to be a “risk off” trade, so I wouldn’t be surprised if the sell off was primarily driven by fund managers rotating risk off to risk on (given the hopes driven by CPI yesterday)

But I was also struck by how insanely overvalued Eli Lilly has become. PE of 53, and the PE multiple has expanded 3x over the last two years, while the underlying business has been mostly flat

GLP-1??

Could be some drug in the pipeline. If anybody is aware please comment

But it’s already a 330B company, hard to imagine a single drug moving them that much

And LLY was up the same amount in the past week.

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