Weekend Update #157
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Markets surged this week following positive inflation data and dovish tones from the Fed. The Consumer Price Index showed inflation grew 3.1% year-over-year for November, in line with expectations and 0.1% lower than October. Similarly, the Producer Price Index for final demand showed 0.9% year-over-year growth, below expectations of 1.0% and October’s reading of 1.2%.
Following a series of positive data over the past few months, policymakers penciled in no further interest-rate hikes in their projections for the first time since March 2021, while indicating that they could cut their benchmark rate three times in 2024. Additionally, Powell’s comments Wednesday during the FOMC meeting suggested a shift from remarks less than two weeks ago, which investors interpreted as a “green light,” with markets now pricing in rate cuts by March 2024. As a result, the S&P 500 finished with its seventh straight weekly gain and highest level since January 2022, while the Dow Jones Industrial Average closed above 37,000 for the first time ever on Wednesday and reached an all time high of 37,305. Investors may be getting ahead of themselves as the market moved deep into “overbought” territory, suggesting a correction could be coming after a strong performance over the past two months.
Additional company news this week:
Hasbro and Etsy are the latest companies to announce layoffs, making reductions of 20% and 11%, respectively, as holiday sales come in weaker than expected.
DocuSign is reportedly working with advisers to explore a sale.
Ford is cutting its planned 2024 production of the F-150 Lightning pickup in half, a stark reversal for the EV it’s been touting as the key to mass adoption.
Intel unveiled the Gaudi3, an artificial intelligence chip for generative AI software, as it looks to compete with rival chipmakers Nvidia and AMD.
Weekly Performance
S&P 500 4,719.19 +2.49%
Dow Jones 37,305.16 +2.92%
Nasdaq 14,813.92 +2.85%
Key Economic Readouts This Week
NFIB Small Business Optimism (Nov.) — Actual: 90.6 ; Estimate: 90.7; Prior: 90.7
Consumer Price Index YoY (Nov.) — Actual: 3.1% ; Estimate: 3.1%; Prior: 3.2%
Producer Price Index YoY (Nov.) — Actual: 0.9%; Estimate: 1.0%; Prior: 1.3%
Retail Sales Advance MoM (Nov.) — Actual: 0.3%; Estimate: -0.1%; Prior: -0.2%
Initial Jobless Claims (Dec. 9) — Actual: 202k; Estimate: 220k ; Prior: 221k
Continuing Claims (Dec. 2) — Actual: 1,876k; Estimate: 1,879k; Prior: 1,856k
Empire Manufacturing (Nov.) — Actual: -14.5; Estimate: 2.0%; Prior: 9.1
Real Average Hourly Earning YoY (Nov.) — Actual: 0.8%; Estimate: --; Prior: 0.8%
Thank you Blue Room Analyst NICK PEART
December 13, 2023
Recent indicators suggest that growth of economic activity has slowed from its strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.
The U.S. banking system is sound and resilient. Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of any additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Adriana D. Kugler; Lorie K. Logan; and Christopher J. Waller.
Andy Cecere — Chairman, President & Chief Executive Officer
Thank you. John and I will just tag team on a short overview of the Bank, and then we'll be happy to take any questions. Let me start by mentioning it, we maybe referring to some forward looking statements, so I refer you to Page 2 for some of the risks and uncertainties.
So let me start with big picture, so I know a lot of you know U.S. Bank, which is from an overview standpoint. As you think about the customers we serve, we're in about just over half of the United States, where we have branches and ATMs and serve core retail customers. But we're a national business in terms of mortgage, credit card, commercial banking, wealth management, institutional services, serving customers across United States and all states.
And then we have three global businesses, Merchant Acquiring, Global Fund Services, and Global Corporate Trusts. Importantly on the next page are the businesses that we serve these customers through. Like most banks, we have a traditional retail banking franchise and commercial banking clients and so forth. But importantly, we have a number of unique businesses, payments, institutional services, wealth management, corporate trust, fund services that are important for a number of reasons.
First of all, they're very capital efficient. Second of all, they're very fee oriented. About 40% of our revenue stream derives from fees, which helps in volatile times. It creates stability of earnings through different economic scenarios, which is what we're seeing right now. And finally, it's an opportunity to deepen client relationships.
So we have a number of products and services that can benefit clients. First of all, probably our most important accomplishment was the successful merger, integration, and conversion of Union Bank. We went through the integration Memorial Day weekend, wrapped it up in June, successfully converted over 1 million consumer customers, 200,000 small businesses, and did it in a very smooth fashion.
Reshma Kewalramani — Chief Executive Officer and President
Good morning, all, and thank you for joining us on short notice. Vertex's differentiated R&D strategy continues to deliver, and we're excited to announce positive results this morning with our selective NAV1.8 inhibitor, VX-548, in a Phase 2 proof of concept study in patients with painful diabetic peripheral neuropathy or DPN.
Let me first share some brief updates to provide perspective on the 548 program as a whole, and then I'll walk through the DPN Phase 2 results.
We divide pain into three distinct categories, acute, neuropathic, and musculoskeletal. We've previously discussed the opportunity in acute pain. With over 80 million patients, any multibillion dollar market today, despite being almost entirely generic, including many generic opioids used in this setting.
We recently completed dosing in our acute pain Phase 3 program with VX-548 and that's previously discussed. We will unblind and analyze all three acute pain trials together and share results in early 2024. Moving to peripheral neuropathic pain or PNP, a collection of painful conditions unified by the same underlying pathophysiology of nerve impairment.
There are approximately 10 million patients treated for PNP each year in the U.S. representing another multibillion dollar market today in the U.S. despite the fact that essentially all prescriptions are generics. Nearly 20% of these patients have DPN and over 40% have lumbosacral radiculopathy or LSR.
There's a large unmet need in PNP given. In LSR, there are no approved treatments, and in DPN, currently available treatment options are associated with high rates of discontinuation, inconsistent dosing, polypharmacy, and off label use. Given the clear challenges of current treatments, including, most commonly, the gabapentinoid class, we believe this creates substantial opportunity for a medicine that could offer a superior profile to currently used medicines.
Gilmore O’Neill – President and Chief Executive Officer
Good morning. And thank you for joining us for this webinar presentation of our accumulated clinical experience with EDIT-301. I'm excited to be here today to share additional clinical data from the RUBY and EdiTHAL studies of EDIT-301.
I joined Editas 18 months ago because I saw a huge opportunity to help transform Editas from a development-stage technology platform company into a commercial-stage genome editing company, and we are well on our way driving towards commercialization with our deliberately designed management team, our focused strategy, and our groundbreaking science.
In the past 18 months, we have formed a new senior management team with a proven track record of drug approvals and with strong domain expertise to leverage cutting-edge gene editing technology. We have focused our strategy on lead asset EDIT-301 and the development of in vivo medicine, making investments based on high conviction targets with a high probability of technical, regulatory, and commercial success. Finally, we have increased our business development activities, specifically out-licensing our foundational Cas9 intellectual property, and we have a strong cash position to fund these activities. Finally, I am pleased to share EDIT-301 is now known as renizgamglogene autogedtemcel, or reni-cel.
Now, since the June 2023 data disclosure at the European Hematology Association, or EHA, Hybrid Congress, and in our company-sponsored webinar, we have shared that we would want to continue to see rapid correction of anemia to normal physiological hemoglobin levels and fetal hemoglobin levels in excess of 40% that are well above anti-sickling threshold and a safety profile that is consistent with myeloablative busulfan conditioning and autologous hematopoietic or CD34 positive stem cell transplant, and all treated sickle cell patients free of vaso-occlusive events or VOEs and all TDT patients achieving transfusion independence.
Before I hand over to Baisong to take you through the data, I want to share a few key takeaways from today's webinar. Reni-cel drives early robust correction of anemia to a normal physiological range of total hemoglobin in sickle cell disease patients. Reni-cel drives robust, sustained increases in fetal hemoglobin in excess of 40%. All RUBY sickle cell patients have remained free of vaso-occlusive events following reni-cel treatment.
Reni-cel treated sickle cell and transfusion dependent thalassemia patients have shown successful engraftment and have stopped RBC or red cell transfusions, and the safety profile of reni-cel observed to date is consistent with myeloablative conditioning of busulfan and autologous hematopoietic stem cell transplant. In addition, the trajectory of the correction of anemia and expression of fetal hemoglobin are consistent across reni-cel treated sickle cell disease and beta thalassemia patients at the same follow-up time. These new data reinforce our belief that we have a competitive product and indeed a product differentiated from other treatments, thanks to its deliberate design by rapid correction of anemia.
Stéphane Bancel -- Chief Executive Officer
Good morning or good afternoon. Thank you for joining us today. We really like to welcome you to this important ESG day. Let me start where I should start, which is the most important in what we do with our mission.
As you know, our mission is to deliver the greatest possible impact to people through mRNA medicine. And as Moderna has been built as a platform since the beginning we believed this will be zero drug or a lot. Well, now we know because of course of Spikevax approval is that this would be a lot the ability to build a platform where we can create a lot of medicines for patients. That's why we work every day at the company.
In that framework, if you think about it, we have set up this ESG framework which is: How do you build the best version of Moderna? And we believe, of course it starts with medicines for patients that you see at the top of this pictogram. But we think the other elements are really critical respect of the environment, having amazing employees, being part and fostering our communities and of course strong governance and strong ethics. We believe this ecosystem is what we build the best version of Moderna and that's what we've been working on for many years now.
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