Telecoms Disconnected as These 2 Stocks Tumbled

So much for the big correction. Although the Dow Jones Industrial Average didn't completely regain all the ground it lost the day before, the 157-point jump it did register yesterday marked its second biggest day of the year, bested only by the first day of trading in 2013, when it came roaring out of the gate 308 points higher.

There were only two losers among the index's components, notably its two telecoms, Verzion (NYSE: VZ  ) and AT&T, yet the former was down less than half a percent while Ma Bell merely lost a penny. No doubt the market is still mulling the $1.5 billion bid Verizon made for the spectrum owned by Clearwire at the same time DISH Network offered to purchase Sprint Nextel for more than $25 billion. With T-Mobile still in the mix to buy MetroPCS, there's suddenly a lot more potentially strong competition on the horizon for the Verizon-AT&T hegemony.

Spectrum is the key to it all and was the driver behind Japan's Softbank making a play for Sprint and Clearwire. As I noted yesterday, Verizon has been quietly accumulating a lot of spectrum itself, though there remain a lot of regulatory hurdles that might not be so easily cleared.

Putting the cart before the horse
Last week after GlaxoSmithKline  (NYSE: GSK  )  reported positive data for its "exon skipping" Duchenne muscular dystrophy therapy drisapersen, Sarepta Therapeutics (NASDAQ: SRPT  ) investors were buoyant over the probability that its own exon-skipping treatment eteplirsen would be favorably received when it came up for FDA review. Yet instead of rolling out the welcome wagon, the regulators asked for more data before they'd approve it for fast-track designation, causing Sarepta's stock to fall 13% on the news

"Exon skipping" allows strands of genes, which are sections of DNA containing instructions for the production of one specific protein, to skip over dysfunctional segments and still complete their mission. The drugs from both Glaxo and Sarepta are designed to skip over a section called exon 51 with molecular patches that allow the gene to splice itself together to complete the sequencing.

I noted before that there were a lot of assumptions being made to bridge the gap between positive data from one and approval for the other, and as has subsequently played out, that was simply a bridge too far. While many analysts have downgraded the stock as a result of the outcome, at least one believes the FDA inquiry indicates that there's still a path for fast-track designation, and he increased his price target to $50 a share, a near-50% premium to where the stock now stands.

At least investors have more opportunity to study closely the probability of approval before they get ahead of themselves again.

Retaining its sheen
Even base metals like copper haven't been immune to the sell-off in precious metals, despite what ought to be a counterbalancing reaction. Base metals should rise as precious metals fall, since the lack of a need for a "safe haven" suggests better times ahead.

Yet because China is such a key piece of the entire global economic puzzle, its softer first-quarter GDP growth of 7.7% reported the other day is putting pressure on base metals too. Taseko Mines (NYSEMKT: TGB  ) fell 5% yesterday as it seemed to indicate it was expecting copper prices will weaken as the year progresses.

The copper miner implemented additional hedging strategies to protect its downside, putting in place put options for 40% of production at its Gibraltar mine at $3 a pound for the first quarter of 2014. Copper currently trades for around $3.25 per pound, and Taseko already has put options in place for the first half of 2013 at $3. But with put options in the back half of the year set as low as $2.75 per pound, it seems the miner is projecting significant weakness.

However, I'm still bullish. I see a copper boom coming, and with its latest round of hedging activities, you could say Taseko is looking more bullish too. Particularly in light of Rio Tinto's massive wall collapse at its Bingham Canyon copper mine in Utah the other day, there could be a supply deficit coming again that tilts pricing in the favor of miners.

I think Taseko's stock collapse, with its shares down 42% from recent highs, is overdone.

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