A daily market update from FS Insight — what you need to know ahead of opening bell
“Life itself is the proper binge.” ― Julia Child
US accuses Visa of monopolizing debit card swipes RT
Dockworkers likely to strike at East and Gulf coast ports AX
Heavy rains lash the Cayman Islands as southeast U.S. prepares for a major hurricane CNBC
OPEC expects oil demand to continue climbing over next two decades WSJ
Germany, Canada join US and UK with un-inverting yield curves BBG
Deutsche Boerse Raided in EU Derivatives Cartel Probe BBG
Record number of factory robots SEM
Commerzbank named Bettina Orlopp as new CEO amid UniCredit threat FT
Lone Fed dissenter was worried bigger rate cut would send signal of ‘economic fragility’ YF
US Investigating SAP, Carahsoft for Potential Price-Fixing BBG
A top KKR exec is pushing for workers’ stake in US companies WSJ
September consumer confidence falls the most in three years CNBC
Nippon Steel’s Mori asks USW leadership to ‘come to the table’ RT
Intel launches new AI chips as takeover rumors swirl YF
Caroline Ellison gets 2-year prison sentence for FTX fraud FT
TikTok to shutter music streaming business in win for Spotify, Apple YF
Government watchdog calls F.A.A. air traffic control systems still critically outdated NYT
Chart of the Day
| Overnight |
| S&P Futures -2
point(s) (-0.0%
) overnight range: -19 to +3 point(s) |
| APAC |
| Nikkei -0.19%
Topix -0.23% China SHCOMP +1.16% Hang Seng +0.68% Korea -1.34% Singapore -1.09% Australia -0.19% India +0.25% Taiwan +1.47% |
| Europe |
| Stoxx 50 -0.24%
Stoxx 600 +0.06% FTSE 100 +0.25% DAX -0.25% CAC 40 -0.18% Italy +0.17% IBEX +0.02% |
| FX |
| Dollar Index (DXY) -0.01%
to 100.45 EUR/USD +0.24% to 1.1207 GBP/USD -0.16% to 1.3391 USD/JPY -0.68% to 144.21 USD/CNY +0.04% to 7.0290 USD/CNH -0.19% to 7.0244 USD/CHF -0.48% to 0.8474 USD/CAD -0.06% to 1.3439 AUD/USD -0.22% to 0.6877 |
| UST Term Structure |
| 2Y-3
M Spread narrowed -0.5bps
to -109.3bps
10Y-2 Y Spread widened 3.9bps to 22.3bps 30Y-10 Y Spread narrowed -0.4bps to 34.9bps |
| Yesterday's Recap |
| SPX +0.25%
SPX Eq Wt +0.15% NASDAQ 100 +0.47% NASDAQ Comp +0.56% Russell Midcap +0.15% R2k +0.17% R1k Value +0.07% R1k Growth +0.40% R2k Value +0.02% R2k Growth +0.31% FANG+ +0.51% Semis +1.86% Software +0.12% Biotech -0.48% Regional Banks -1.35% SPX GICS1 Sorted: Fin -0.92% Utes -0.76% Cons Staples -0.38% Energy -0.29% Healthcare -0.22% REITs -0.06% SPX +0.25% Comm Srvcs +0.40% Indu +0.70% Cons Disc +0.76% Tech +0.79% Materials +1.35% |
| USD HY OaS |
| All Sectors -3.0bps
to 363bps All Sectors ex-Energy -3.0bps 335bps Cons Disc -3.2bps 319bps Indu -4.1bps 268bps Tech -8.9bps 349bps Comm Srvcs -4.2bps 596bps Materials -4.2bps 346bps Energy +0.8bps 327bps Fin Snr -2.2bps 323bps Fin Sub -1.0bps 233bps Cons Staples -4.0bps 324bps Healthcare -1.1bps 379bps Utes -1.4bps 223bps * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 9/25 | 10:00 AM | Aug New Home Sales | 700 | 739 |
| 9/25 | 10:00 AM | Aug New Home Sales m/m | -5.3 | 10.6 |
| 9/26 | 8:30 AM | 2Q T GDP QoQ | 3 | 3 |
| 9/26 | 8:30 AM | Aug P Durable Gds Orders | -2.7 | 9.8 |
| 9/27 | 8:30 AM | Aug PCE m/m | 0.1 | 0.2 |
| 9/27 | 8:30 AM | Aug Core PCE m/m | 0.2 | 0.16 |
| 9/27 | 8:30 AM | Aug PCE y/y | 2.3 | 2.5 |
| 9/27 | 8:30 AM | Aug Core PCE y/y | 2.7 | 2.62042 |
| 9/27 | 10:00 AM | Sep F UMich 1yr Inf Exp | n/a | 2.7 |
| 9/27 | 10:00 AM | Sep F UMich Sentiment | 69.3 | 69 |
| 10/1 | 9:45 AM | Sep F S&P Manu PMI | n/a | 47 |
| 10/1 | 10:00 AM | Sep ISM Manu PMI | 47.5 | 47.2 |
| 10/1 | 10:00 AM | Aug JOLTS | n/a | 7673 |
MORNING INSIGHT
Good morning!
After falling -4% in the first week of September, the S&P 500 has managed to climb back steadily and is up 1.5% for the month. This is a sign of a strong market, marking the S&P 500 to be up 8 of the 9 months in 2024. Granted, there are still 6 days left, but this is a big comeback.
Click HERE for more.
TECHNICAL
Chinese Equity ETF’s look to be turning higher in the near-term after PBOC move. FXI 7.68% closed nearly 9% yesterday on very heavy volume. This arguably looks constructive for China, which has lagged all year.
Click HERE for more.
CRYPTO
We see the BTC ETF options approval and PBOC’s monetary stimulus as having important implications on the broader crypto ecosystem. The recent outperformance of Chinese equities serves as a bullish signal for BNB.
Click HERE for more.
First News
Weighty examinations. Novo Nordisk CEO Lars Jorgensen appeared before the Senate Health, Education, Labor, and Pensions Committee yesterday to answer senators’ questions about the high prices Novo Nordisk charges for its blockbuster weight-loss drugs, Ozempic and Wegovy. Critics have recently pointed out that the company can no longer claim that the higher prices are needed to recoup R&D costs: for example, one analysis suggests that by the end of 2024, Novo Nordisk’s revenues for the two medications will have covered the entirety of the firm’s R&D expenditures since 1995.
For his part, Jorgesen sought to place the blame on the U.S. healthcare system’s pharmacy benefit managers (PBMs), claiming that they are incentivized to cover drugs with higher list prices and that lowering prices would therefore reduce coverage for U.S. patients – without saving U.S. patients any money. That’s similar to an argument that the FTC made recently in a lawsuit alleging that the three dominant PBMs had artificially inflated insulin costs through a “perverse drug rebate system.” (Representatives for the respondents in that lawsuit, CVS Health’s Caremark Rx, Cigna’s Express Scripts, and UnitedHealth Group’s OptumRx, have each strongly denied responsibility.)
However, with regard to weight-loss treatments, Sen. Bernie Sanders (I-Vermont) announced at yesterday’s hearing that all three of the major PBMs had given him assurances that they would not reduce coverage – and would likely expand it – if the list price were to be reduced. Jorgensen’s response was noncommittal.
Apparently left unmentioned are the basic economics behind high prices – limited supply (due to limited manufacturing capacity, which Novo Nordisk and Eli Lilly are working to expand) and ever-increasing demand. It isn’t just the large number of obese and diabetic patients who likely stand to benefit from the GLP-1/semaglutide treatments, but also the expanding list of indications (ailments) for which they can be prescribed to treat, including heart disease, kidney failure, and dementia.
The mechanism for benefits to such patients is not clear, but some researchers believe it has to do with the anti-inflammatory properties of GLP-1 drugs, rather than the benefits from weight loss. Whereas previously, inflammation was thought of as the side effect of the immune system’s response to infection or injury, a growing body of research suggests that inflammation is often not a symptom, but the cause of, a wide range of ailments, ranging from autoimmune diseases like rheumatoid arthritis to heart disease, gastrointestinal disorders like Crohn’s disease, Alzheimer’s disease, and even some cancers. If this theory proves true, GLP-1 medications could end up with a far greater range of uses.
In any case, both companies have already begun to lower prices for their respective treatments. The companies are responding to not just expanding manufacturing capacity, but also competition from significantly cheaper facsimile treatments from compounding pharmacies. Additional pressure on price could be imminent, as Ozempic is slated to become eligible for the next round of Medicare drug price negotiations.
Eli Lilly, Novo Nordisk, and other pharmaceutical companies also have next-gen weight-loss treatments in their respective pipelines. Novo Nordisk recently announced that preliminary test data showed its experimental weight-loss pill, amycretin, could be significantly more effective that Wegovy/Ozempic, as could Eli Lilly’s retatrutide.
