MARKET - Bitcoin Continues Upward Trend

Bitcoin surge continues to frustrate, impress or surprise skeptical market analysts

At 17:20 hrs Mountain Time today, Bitcoin was valued at US$16,892.01  (C$21,972.12)

Kevin O'Leary on CNBC explains one big thing people don't understand about bitcoin (but need to)

Futures Industry Association Blasts New Bitcoin Derivatives

ACQUIRE - CVS buys Aetna for US$69B

Aggregation by a pharmacy benefit manager (PBM) may deliver a shorter path, better care and lower costs.

According to Bruce Japsen in Forbes the CVS deal, values Aetna at $207 a share, and creates a company with combined annual revenues of $240 billion, which rivals United Health Group ($225 billion forecast in fiscal 2018). Japsen notes that Aetna aborted its effort to buy rival health insurer Humana last year in the face of antitrust scrutiny and didn’t have the resources to build doctor and outpatient care centres like United’s Optum unit has been doing.

“This combination brings together the expertise of two great companies to remake the consumer health care experience,” said CVS President and Chief Executive Officer Larry Merlo. “With the analytics of Aetna and CVS Health’s human touch, we will create a health care platform built around individuals.”

The Washington Post quoted Michael Rea, Chief Executive of Rx Savings Solutions, “This is kind of uncharted territory — a pharmacy benefit manager (PBM) buying a major national health plan. I think it’s a sign of the times, PBMs represented a little-known entity no one knew about not that long ago, and now they’re the controlling piece of the deal to take over a national insurer.”

No one should be surprised. The margin between pharmaceutical manufacturer and consumer is open to attack and consumer satisfaction is low. In once sense, it's no different than the aggregation that is happening in other markets such as grooming products. An InfoStream story earlier this week showed Gillette's ability to drive the price of a razor into the stratosphere opened the door for innovators to rethink the market and gather in quite a bit (11%) of Gillette's market share.

While the CVS Aetna transaction may be uncharted territory, the sector will likely see more activity. According to a story by Lauren Hirsch of CNBC on Monday, the CVS acquisition is aimed at driving Aetna healthcare subscribers to CVS stores. She suggests a 'market watch' on Walgreens, Rite Aid, Kroger and Walmart to look for similar mergers or acquisitions. Everyone sees the need for these players to shore up market share, acquire innovation and eliminate threats.

According to an article in Fortune, Wall Street is skeptical. The success of CVS Health Corporation's acquisition of health insurer Aetna Inc. is a bet on a complex and untested strategy. Some analysts are questioning whether the companies can pull it off.

CVS plans to build mini health centres in some of its 9,700 stores, turning them into key locations where Aetna members — and customers of rival insurers — get low-level care for ailments and chronic diseases. Already, CVS has 1,100 'MinuteClinics' in its pharmacies, and is testing out hearing and vision offerings in a handful of CVS locations.

Investors also seem to be showing skepticism. Aetna stock was trading at $180.11 as of 9:34 a.m. in New York on Tuesday. That’s 13 percent below CVS’s $207-a-share cash-and-stock offer. Investors may be pricing in the fact that CVS Health will no longer be a dividend growth company following this transaction.

CVS competitor UnitedHealth Group has a menu of health insurance products under its umbrella including Medicare, Medicaid and OptumRx as its' pharmacy benefit manager (PBM) as well as 30,000 healthcare professionals and hundreds of practices, outpatient surgery centres and urgent care facilities spreading across the country.


WHY THIS IS IMPORTANT:
Rethinking the market to create a broader ecosystem has just begun. Technology is driving the ability to bring new bedfellows together, but innovative thinking to find large pools of subscribers that can be cemented into an existing ecosystem is the game. This aggregation has already begun in the dental and cosmetic business and is also beginning in healthcare for companion animals. 

Watch the companion animal market for moves to cement a national animal health insurer together with retail locations, veterinary hospitals, diagnostics, technology and nutrition. Companies like Fairfax, Mars, National, Nestle, Petco and PetSmart will likely look at this deal very closely. 

While some call this kind of transaction a 'market consolidation', at Paradigm we look at it from the client perspective. It is really about aggregating the client demand while improving the client experience and convenience.

MARKET - Bitcoin Surges Higher

The speculation about factors driving Bitcoin value continues

Whether it is possible to know with confidence, the factors that are driving the value of Bitcoin at this point, seems unlikely. However, as a matter of support for conjecture that Bitcoin is not just a bubble are the announcements that derivatives and other financial products are being placed on the market by some of the largest trading organizations.

This morning Bitcoin value exceeded US$11,000. 

In Canadian dollars a Bitcoin was valued at C$13,770.48 earlier this morning.

CNBC asked panelists to explain this meteoric rise in value

BUSINESS - Rumoured Twitter Acquisition by Google or Salesforce

Yesterday, CNBC reported a potential acquisition of Twitter by Google, Salesforce or another technology company.

Twitter stocks took an immediate jump and rose more than 21 percent on Friday ending at more than $22 - the highest they have been since January of this year.

According to CNBC, Twitter may receive a formal bid “shortly,” with Twitter’s board keen to strike a deal. There is no assurance, but sources told them momentum is building and a potential deal may be finalized by the end of the year.

Companies like Google and Microsoft have been tossed out as potential buyers of Twitter, but this is the first time Salesforce has been put into the mix.

It is known that Salesforce missed out on acquiring LinkedIn, so Twitter could offer a way for Salesforce to become more active in the real-time information field.

Twitter is an attractive target due to the abundance of data it holds, and this means it’s an alluring proposition for any firm that thrives on data.

RSA Operating Profits up 84% and Interim Dividend Restored

• RSA Group CEO Hester reports upswing in results

• CNBC reports Zurich acquisition of RSA not on the table

Stephen Hester the former chief executive of the Royal Bank of Scotland, seems to be pulling off the miracle he promised shareholders for RSA Group earlier this year. For the moment he refuses to see the future of the RSA Group as anything but a standalone company. 

Profits for RSA Group include a strong showing from RSA Canada the owner of the Pets Plus Us Canada's health insurance provider for dogs and cats.

• Watch RSA's Hester on YouTube