TTWO - Wall Street Breakfast Podcast: Tech Optimism Rides To All-Time High

2024-01-19 07:59:00 ET

Summary

• Congress passes stopgap spending bill to avert government shutdown and buy more time for funding negotiations.
• Prices of diabetes drugs Mounjaro and Ozempic see increases, along with hundreds of other drugs.
• Nasdaq 100 reaches all-time high, driven by tech optimism and strong performance of Information Technology sector.

Listen below or on the go on Apple Podcasts and Spotify

No shutdown: Congress clears stopgap spending bill (0:30), diabetes drugs see price raises (1:15) and Nasdaq 100 rides tech optimism to all-time high (3:25).

This is an abridged transcript of the podcast:

U.S. Congress cleared a temporary spending bill to fund the government into early March, averting a partial shutdown ahead of an expected snowstorm and buying more time for lawmakers to hammer out funding bills for the fiscal year that started in October.

The Senate voted for the continuing resolution 77-18, while the House of Representatives voted 314-108. The temporary bill will fund certain government operations till March 1, while the deadline for the remaining has been pushed to March 8. Funding would've run out on Jan. 19 and Feb. 2 under current law.

The latest continuing resolution is the third extension made for fiscal 2024 since October 1. White House press secretary Karine Jean-Pierre said Biden would sign the resolution.

Two popular diabetes medicines from Eli Lilly (NYSE: LLY ) and Novo Nordisk ( NVO ), Mounjaro (tirzepatide) and Ozempic (semaglutide), saw list price hikes in the first half of January.

Mounjaro's price rose 4.5% to ~$1,070 for a one-month supply, according to an analysis performed for The Wall Street Journal. Ozempic's price rose by 3.5% to ~$970 for one month. The newspaper noted that prices were hiked on hundreds of other drugs this month by a median of 4.5%. Some medicines saw 10% and higher raises.

The Journal reported that Novo Nordisk ( NVO ) said price changes are due to market conditions and inflation, adding their hikes haven't been 10% or more since 2016. Lilly ( LLY ) added prices are based on a drug's value, efficacy and safety.

U.S. videogame sales rose 4% year-over-year in the all-important holiday shopping month of December, with broad gains helping to secure growth numbers on a full-year basis as well.

Overall sales rose to $7.9B, up from $7.63B in December 2022, according to research group Circana, whose measurement period ran from Nov. 26-Dec. 30, covering the industry's biggest sales month from post-Thanksgiving through Christmas.

Growth in Xbox series (NASDAQ: MSFT ) helped offset a double-digit drop in Nintendo Switch ( OTCPK:NTDOY ), Circana analyst Mat Piscatella noted. (The Switch is the platform likely headed for the soonest refresh.) Sony's (NYSE: SONY ) PlayStation 5 was the top platform in unit sales and dollar terms, ahead of the Switch in each case -- and Sony's ( SONY ) hardware sales hit a new monthly sales record for the company.

No surprise that Call of Duty: Modern Warfare III ( MSFT ) held the crown as December’s top-selling game, repeating from November. Warner's ( WBD ) Hogwarts Legacy was the year's best-selling game overall -- breaking a 14-year streak in which the year's best-seller was either an installment of Call of Duty (Activision/ MSFT ) or a game from Grand Theft Auto maker Rockstar ( TTWO ).

The double-digit jump in accessories was driven by a 21% increase in gamepad sales, while headset/headphone spending rose 5% in December.

Other articles to look out for on Seeking Alpha:

Mark Zuckerberg: Meta is investing in Nvidia chips to build AI

Biden administration to forgive another $5B in student debt

Reddit mulls launching IPO in March - report

Only three weeks into the new year, tech is showing its staying power, with the market continuing to favor the sector. Chip optimism and AI headlines are helping support the sentiment despite some concerns that Fed rate cuts may take place a little later this year . In fact, the Nasdaq 100 ( NDX ) closed Thursday at a new all-time high at 16,982, while the best year-to-date performance for any S&P 500 sector is Information Technology (SP500-45TR) with an increase of 2.6%.

With artificial intelligence all the rage these days, the ones that are ahead in the race stand to benefit. Some buying may also be taking place before tech earnings next week , while the trillions of dollars parked in money-market funds and other cash-like investments may be coming off the sidelines with yields looking less attractive.

A soft landing also appears to be in the cards and that may mean less macro uncertainty, letting companies talk more positively about the upside and their bullish product developments.

Gold prices ( XAUUSD:CUR ) ticked higher for a second-consecutive session early on Friday, as the U.S. dollar index ( DXY ) eased, although the metal was headed for a weekly fall after recent jobs data suggested there’s less need for the Federal Reserve to cut interest rates.

Ahead of the FOMC blackout period that starts at the end of this week, Fed speakers have not leaned towards endorsing an early rate cut. A similar theme emerged from the latest gathering of the world's political and business elites in Davos , Switzerland.

Turning to the energy market, oil prices also moved higher, with both benchmarks headed for a weekly gain, as economic concerns in China, the largest importer of crude oil, were countered by Middle East tensions and oil output disruptions caused by a cold snap in the United States. The cold snap has knocked out 15% of U.S. Gulf Coast oil-refining capacity, Bloomberg reported.

Elsewhere among agriculture commodities, soybean, wheat and cocoa ticked up. Signs of food inflation are cropping up, from coffee -- which is taking a direct hit from Red Sea trade disruption -- to chocolate, where output has slowed to Covid-era levels amid a cocoa shortage that has pushed futures to a four-decade high, Bloomberg reported.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, stock index futures pointed to a higher open Friday with the broader market in view of a winning shortened week thanks to growth stocks.

Nasdaq 100 futures ( NDX:IND ) +0.8%, S&P futures ( SPX ) +0.4% and Dow futures ( INDU ) +0.2% are higher.

Rates were steady. The 10-year Treasury yield ( US10Y ) is flat around 4.14%.Crude +0.9% to $73.11. Gold +0.4% to $2,014.50. Bitcoin -0.7% to $42,384.

The biggest movers for the day premarket:

Super Micro Computer (NASDAQ: SMCI ) shares jumped more than 13% after it raised its 2Q24 sales and profit guidance . The company attributed the increase in guidance to a robust market and strong demand from end customers for its rack-scale, AI, and total IT solutions.

Shares of iRobot (NASDAQ: IRBT ) tumbled by 35% early Friday, following a 14% decline on Thursday, triggered by a report suggesting that the European antitrust regulator is likely to oppose the planned $1.7B sale to Amazon (NASDAQ: AMZN ).

Esperion Therapeutics (NASDAQ: ESPR ) shares plunged over 24% as it announced the pricing of its previously disclosed underwritten public offering, consisting of 56.7M shares of common stock at $1.50 per share, aiming for gross proceeds of approximately $85.1M. Additionally, ESPR has granted underwriters a 30-day option to purchase up to an additional 8.5M shares. The offering is scheduled to close on January 23, 2024.

On today’s economic calendar:

At 10:00 a.m., look for Existing Home Sales. Economists expect little change at a rate of 3.82M. And Fed Vice Chairman Michael Barr will speak this afternoon at 1 p.m., although not much on monetary policy is expected.

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