NVO - Wall Street Breakfast Podcast: Is Inflation Cooling?

2023-07-12 06:30:41 ET

Summary

• The U.S. Labor Department is expected to release data showing a decrease in inflation in June, with CPI projected to rise 3.1% Y/Y, down from 4.0% in May.
• The European Medicines Agency has extended its investigation into a potential link between suicidal behavior and weight loss drugs, including those produced by Novo Nordisk, Eli Lilly, and Sanofi.
• The Federal Trade Commission is reportedly considering an appeal to halt Microsoft's acquisition of Activision Blizzard, with a termination date for the $69B deal set for July 18.

Listen below or on the go on Apple Podcasts and Spotify June consumer price index expected to show inflation cooling further — or will it? (00:29) EU expands probe into suicide risk linked to weight loss drugs. (02:08) FTC reportedly leaning toward quick appeal of Microsoft-Activision (MSFT) (ATVI) loss. (03:02)

This is an abridged transcript of the podcast.

In May CPI was at 4.0% Y/Y and core CPI at 5.3%, still far from the Federal Reserve's target of 2%. That means that Fed officials are still signaling further rate hikes in an effort to cool the economy, and with it, the trajectory of prices.

At 8:30 this morning, the U.S. Labor Department will release its June CPI report .

Economists expect the headline number to rise 3.1% Y/Y in June, down from 4.0% in May, and core CPI to increase 5.0%, easing from 5.3% in the prior month. On a month-over-month basis, CPI is expected to rise 0.3% vs. 0.1% in May and core CPI is expected to increase 0.3% vs. 0.4% in the prior month.

According to the CME FedWatch tool , traders expect the Fed to raise its policy rate by 25 basis points to 5.25%-5.50%, assigning a 92.4% probability to that outcome, up from an 86.8% probability a week ago.

SA analyst Christoper Robb sees "a real possibility" that CPI could fall more than the consensus. He points to the fact that used car prices fell 4.2% in June, the biggest monthly drop since early in the pandemic, according to the Manheim Used Vehicle Value Index. He also points to signs that worsening housing affordability could lead to a "double punch of relief to core inflation."

The European Medicines Agency ( EMA ) announced Tuesday that its investigation into reports of suicidal behavior linked to Novo Nordisk's ( NVO ) weight loss and diabetes drugs has been extended to include other products in the drug class.

Ozempic, Saxenda, and Wegovy are in this class of drugs that are used for weight loss and to treat type 2 diabetes.

Others on the market include Eli Lilly's ( LLY ) blockbuster diabetes therapy Trulicity and Sanofi's ( SNY ) Adlyxin.

The agency started its probe early this month after reports of suicidal thoughts and self-injury were linked to sthe active ingredients of Novo's ( NVO ) Wegovy/ Ozempic and Saxenda, respectively.

According to the EMA, officials have received 150 reports of self-injury and suicidal thoughts in patients.

The regulator expects to conclude its review in November 2023.

The Federal Trade Commission is reportedly leaning toward appealing its court loss in trying to stop the purchase of Activision Blizzard (NASDAQ: ATVI ) by Microsoft (NASDAQ: MSFT ) -- perhaps as soon as today.

The agency would be working to beat a short pause on the deal that's set to expire Friday, at midnight PT. The $69B acquisition has a termination date of July 18, less than a week away, and Microsoft may be aiming to close it on Monday.

But according to Bloomberg it's looking likely that an appeal will come quickly.

A court on Tuesday ruled against the FTC, which was seeking an injunction to stop the deal, leading Activision Blizzard stock ( ATVI ) to rise.

Activision closed up 10% to $90.99, just below the $95/share acquisition price.

Other headlines to look out for on Seeking Alpha:

Coty rises as Kim Kardashian said to want SKKN stake back

Disney reportedly discussing strategic options for India business

Shift to terminate 34% of workforce, end investment into dealer marketplace business

Matterport terminates 30% of workforce to accelerate path to profitability

Taiwan Semi eyes 2024 construction of second Japanese chip plant

Tower Semiconductor gains amid report Intel CEO visiting China

On our catalyst watch for the day, DoorDash ( DASH ), Just Eat Takeaway's ( OTCPK:JTKWY ) Grubhub, and Uber Eats ( UBER ) will be on watch to see if a judge lifts or extends the temporary halt on new legislation covering minimum wages for delivery workers.

And Prime Day continues today.

U.S. stocks on Tuesday gained through the day to end the session higher.

The Nasdaq ( COMP.IND ) closed 0.55% higher. The S&P 500 ( SP500 ) added 0.67%, while the Dow ( DJI ) advanced 0.93%.

All 11 S&P sectors ended in the green - with the exception of Health Care which was unchanged. Energy gained +2% after crude oil prices rose. Consumer Staples and Tech rose the least.

Treasury yields were mixed. The 10-year yield ( US10Y ) dropped below 4%, down 3 basis points to 3.98%. The 2-year yield ( US2Y ) was up 2 basis points to 4.88%.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are pointing higher. The Dow is up 0.2%, the S&P 500 is up 0.3% and the Nasdaq is up 0.3%. Crude oil is up 0.5% at more than $75 a barrel. Bitcoin is up 1%.

In the world markets, the FTSE 100 is up 1% and the DAX is up 0.8%.

On today’s economic calendar, at 830 am CPI and at 10 am Atlanta Fed’s business inflation expectations.

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