Monday, March 25, 2024

Markets drift lower in lackluster trading

Dow dropped 172, decliners modestly ahead of advancers & NAZ was off 47.  The MLP index stayed near 281 & the REIT index was off 1+ to the 376s.  Junk bond funds slid a little lower & Treasuries continued to see modest selling, raising yields.  Oil went up 1+ to the 82s & gold gained 14 to 2174 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Amgen (AMGN) is taking a new approach as it tries to stand out in a crowded field of drugmakers racing to develop the next blockbuster weight loss drug.  The biotech company is testing an injectable treatment that helps people lose weight differently from the existing injections from Novo Nordisk (NOVO) & Eli Lilly (LLY), & other obesity medicines in development.  AMGN's treatment, called MariTide, also appears to help patients keep weight off after they stop taking it.  The drugmaker is also testing its drug to be taken once a month or even less frequently, which could offer more convenience than the weekly medicines on the market.  It's too early to say how competitive AMGN will be in the budding weight loss drug space, which NOVO & LLY have so far dominated.  Some analysts expect the market could be worth $100B by the end of the decade, potentially leaving room for new competitors to enter.  Goldman Sachs also projects 10-70M Americans will be taking weight loss drugs by 2028.  The available data on AMGN's injectable drug is promising, but it's from a small, early-stage clinical trial.  The company also is developing an oral medicine & other treatments for obesity, but has disclosed few details about them.  AMGN stock rose 30¢.

Amgen wants to enter the weight loss drug market with a new approach

Demand for weight loss drugs is booming in the US despite their limited insurance coverage & roughly $1000 monthly price tags before discounts.  But some patients are willing to pay more out of pocket for those treatments than others, & that desire is strongly correlated to their annual income.  That's according to a recent survey from Evercore ISI focused on GLP-1s, a new class of medications used to treat Type 2 diabetes & obesity.  Between Jan 24 - Feb 20, the firm surveyed more than 600 participants who are currently taking a GLP-1, considering the therapy or have taken it in the past but no longer do.  The findings on how much patients are willing to spend underscore concerns about equity in access to the breakthrough drugs while insurance coverage is sparse.  GLP-1s include NOV's blockbuster weight loss injection Wegovy & diabetes counterpart Ozempic, along with LLY's popular weight loss treatment Zepbound ' diabetes injection Mounjaro.  A monthly package of a GLP-1 costs $900 - $1350 before insurance & other rebates.  Both companies have savings programs that aim to reduce out-of-pocket costs for weight loss drugs, regardless of whether a patient has commercial insurance coverage.  The majority, nearly 60%, of people surveyed with annual incomes of more than $250K said the maximum price they are willing to pay out of pocket for a GLP-1 is more than $300 per month.  Only about 4% of people with annual incomes of less than $75K said the same thing.  Of that group, 64% said the maximum price they are willing to pay out of pocket for a GLP-1 is $50 per month or less.

How much people are willing to spend on weight loss drugs, according to a survey

Nissan  (NSANY) is targeting an additional 1M vehicle sales over the next 3 years & a 30% reduction in electric vehicle production costs by 2030, the Japanese carmaker announced.  In a new medium-term business plan, NSANY also said it would launch 30 new models by fiscal 2026, with 16 of these electrified.  It's aiming for EV & combustion engine costs to reach parity by 2030.  “This plan will enable us to go further and faster in driving value and competitiveness,” Pres & CEO Makoto Uchida said.  “Faced with extreme market volatility, Nissan is taking decisive actions guided by the new plan to ensure sustainable growth and profitability.”  The automaker also said it is targeting an operating profit margin of more than 6% by the end of fiscal 2026, as well as “long-term profitable growth.”  It comes as the hype around electric vehicles appears to have cooled a little recently, with major manufacturers scaling back or delaying EV plans amid cooling demand.  Even sector giant Tesla (TSLA) is bracing for what CEO Elon Musk said in Jan “may be a notably lower” rate of growth.  Traditional auto powerhouses are also facing a huge competitive challenge from China when it comes to electrification.  The country boasts the world's largest & most crowded EV market & its automakers are exerting significant downward pressure on prices.  CEO Uchida said that the development of the EV sector & particularly the price pressures, had come “much, much earlier than we thought.”  Under the 2-part plan dubbed The Arc, NSANY said it will aim to ensure volume growth through a “tailored regional strategy,” & prepare for an accelerated EV transition by balancing its portfolio between EV & combustion cars, growing volumes in major markets, & financial discipline.  This will be supported by “smart partnerships, enhanced EV competitiveness, differentiated innovations and new revenue streams.”  NSANY said this strategy could yield potential revenues of  ¥2.5T ($16B) from new business opportunities by fiscal 2030.  NSANY stock fell 11¢.

Nissan looks to address ‘extreme market volatility’ with 30 new models, EV cost cuts

Gold prices rose, driven by expectations of interest rate cuts by the Federal Reserve this year, even as traders await inflation readings this week for confirmation on the timing of these reductions.  Spot gold gained 0.5% to $2174 per ounce today & gold futures settled 0.8% higher at $2176.  The weekly initial jobless claims print is due on Thurs & will be followed by the US core personal consumption expenditure (PCE) price index data on Fri.  The $ also pared some of last week's gains, making bullion cheaper for overseas buyers.  Gold hit record peaks last week after the Fed reiterated its view of 3 rate cuts in 2024.  Traders are pricing in a 70% probability of a Jun rate cut, versus 65% before the Fed's Mar policy meet last week.  Lower interest rates tend to make zero-yield gold more appealing.  Gold also continued to draw support from strong central bank buying & safe-haven demand.

Gold gains as rate cut bets hold ground in run-up to inflation test

West Texas Intermediate (WTI) closed higher following 3 losing sessions on expectations demand will rise with interest-rate cuts on the horizon while supply remains constricted with OPEC+'s 2.2M barrels per day of voluntary cuts continuing.  WTI crude oil for May closed up $1.32 to settle at $80.88 per barrel, while May Brent crude, the global benchmark, was last seen up $1.22 to $86.65.  The rise comes as the Federal Reserve & other central banks are expected to begin a cycle of lowering interest rates with inflation slowing in most markets.  The cuts are expected to spur economies & raise demand, even as OPEC+ continues to restrict production.

WTI Crude Oil Rises as Falling Interest Rates to Stimulate Demand as Supply Remains Constrained

This week should feature quiet trading ahead of a long holiday weekend.  The most exciting news will come on Thurs, the last day of trading, & on Fri when the markets are closed..

Dow Jones Industrials 

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