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Futures Power Higher On Upbeat Chinese, German Data

Futures Power Higher On Upbeat Chinese, German Data



Futures Power Higher On Upbeat Chinese, German Data Tyler Durden Tue, 09/15/2020 - 07:59

US equity futures and world stocks continued their ramp higher on Tuesday following upbeat German and Chinese data showed the economic recovery was gaining traction, coupled with the usual optimism about coronavirus vaccines while the struggling dollar kept the hot streaks for the euro and some of the biggest emerging market currencies sizzling. The USDJPY slumped to 105.53 while the Chinese yuan rose above 6.80, the highest level since May 2019.

E-Mini futures for the S&P 500 put on 0.6%, also reversing early losses. Tesla, Apple and Nvidia all climbed in pre-market trading, while in Europe Hennes & Mauritz AB led a rally among fashion retailers after beating profit estimates. Ocado Group gained after the U.K. grocery delivery company reported a strong surge in sales. Sentiment was also boosted by hopes for a COVID-19 vaccine after British drugmaker AstraZeneca restarted its vaccine trial and the dollar extending recent losses, other currencies were also on the rise.

“It is better risk appetite and the softer dollar environment,” ING’s Chief EMEA FX and interest rate strategist, Petr Krpata, said, though the approaching U.S. election was likely to prevent too much of a run up, he added.

"Market volatility is returning after months of steady advances in risk assets,” BlackRock Investment Institute strategists led by Elga Bartsch said. "Valuations have risen, and we could see greater volatility as a result, especially as the U.S. election closes in."

Europe’s STOXX 600 was last up 0.5% having shaken off its slow start after a surprise jump too in Germany’s ZEW sentiment survey, which surged to 77.4 (up from 71.5), smashing expectations of 69.8, and the highest since June 2000.

“The September ZEW was a strong beat, with expectations reaching a 20-year high and current conditions also exceeding expectations,” Morgan Stanley economist Markus Guetschow said, although he did caution most other data was still gloomier.

Earlier in the session, the MSCI index of Asia-Pacific shares ex-Japan added 0.5%, for a fourth straight day of gains that propelled it up 3% for the year  with health care rising and consumer staples falling, after rising in the last session. Most markets in the region were up, with Thailand's SET gaining 0.8% and South Korea's Kospi Index rising 0.6%, while Jakarta Composite dropped 1.2%. The Topix declined 0.6%, with Hamee and Diamond Electric Holdings falling the most. The Shanghai Composite Index rose 0.5%, with Junzheng Energy and Ningbo Shanshan posting the biggest advances.

The offshore yuan climbed to the highest level in a year and stocks in Shanghai advanced on evidence that China is accelerating out of the virus slump. As noted last night, industrial production beat expectations, while retail sales rose for the first time this year in August.

The day’s eye-catching move was a 16-month high for the yuan as 5.6% jump in Chinese industrial output in August and the first pick-up in retail sales since the coronavirus outbreak gave it its best day since July. "Strong external demand, a further recovery from the pandemic and pent-up demand from the floods all contributed to the robust activity data in August," Ting Lu, chief China economist at Nomura, said in a note to clients. "We expect a further, albeit gradual, recovery of the services sector, a steady improvement in retail sales and elevated fixed-asset investment growth."

With the yuan leading the charge, MSCI’s EM FX index also climbed to a near 7-month high. The Australian dollar led an advance among Group-of-10 currencies against the greenback after the central bank’s latest minutes showed it didn’t plan to ease further anytime soon. The Bloomberg Dollar Spot Index gave up an earlier advance after China posted its first growth in retail sales since Covid-19 hit early in the year. The euro rose a fifth day against the greenback, up 0.2% at $1.1891 after the surprise jump too in Germany’s ZEW sentiment survey, while the pound advanced for a second day on improved global risk appetite. The yen nudged higher as Japanese Chief Cabinet Secretary Yoshihide Suga won a ruling party leadership vote, as expected, paving the way for Japan’s first change of leader in nearly eight years.

“He’s seen as someone who’s particularly stock market friendly. The fact that we’ve got political certainty for the next two years from someone who’s connected to the free market is going to be good news for Japan,” said Jim McCafferty, joint head of Asia Pacific equity research at Nomura.

Investors now turn their attention to the Federal Reserve whose two-day policy meeting begins today to gauge the outlook for markets following a slide of about 2% in global stocks this month. The Fed is expected to maintain its dovish stance after earlier saying it will shift to a more relaxed approach on inflation. Central bank largesse is shoring up sentiment in the face of risks from the pandemic, the U.S. presidential election and the possibility of a no-deal Brexit.

In rates, treasuries were weaker as U.S. trading gets under way, led by long end ahead of $22b 20-year bond reopening at 1pm. U.S. yields lag steeper increase in several European markets, especially supply-driven move in U.K. gilts. Yields were higher by about 2bp at long end, 10-year by less than 1bp at 0.68%; WI 20-year yield is around 1.22% vs 1.185% stop in August new-issue auction. Last week’s 30-year reopening stopped through slightly, arresting a bear-steepening move in Treasuries and easing concern about appetite for record-size auctions; Tuesday’s 20-year reopening is $5b larger than last quarter’s taps, and the projected total issue size for the August 2040 bond is $69b vs $44 billion for the May 2040 according to Bloomberg.

In commodities, Brent crude climbed back to $40 a barrel and gold prices put on 0.4%, extending a sharp rise in the previous session. WTI and Brent futures have been on an upward trajectory in the latter part of the European morning as traders balance the supply and demand implication arising from developments in the Gulf of Mexico alongside a resurgence of the pandemic ahead of the JMMC meeting on Thursday. Most industrial metals were bolstered by the robust Chinese data; gold jumped on the back of the weaker dollar.

Looking at the day ahead, we’ll get the Empire State manufacturing survey for September, as well as industrial production, capacity utilisation and the import price index for August. FedEx is among companies reporting earnings.

Market Snapshot


  • S&P 500 futures up 0.4% to 3,395.00
  • STOXX Europe 600 up 0.2% to 369.30
  • MXAP up 0.09% to 173.18
  • MXAPJ up 0.5% to 569.87
  • Nikkei down 0.4% to 23,454.89
  • Topix down 0.6% to 1,640.84
  • Hang Seng Index up 0.4% to 24,732.76
  • Shanghai Composite up 0.5% to 3,295.68
  • Sensex up 0.5% to 38,966.30
  • Australia S&P/ASX 200 down 0.08% to 5,894.83
  • Kospi up 0.7% to 2,443.58
  • Brent Futures up 0.3% to $39.72/bbl
  • Gold spot up 0.3% to $1,963.16
  • U.S. Dollar Index down 0.1% to 92.92
  • German 10Y yield rose 0.9 bps to -0.471%
  • Euro up 0.2% to $1.1884
  • Brent Futures up 0.3% to $39.72/bbl
  • Italian 10Y yield fell 4.1 bps to 0.815%
  • Spanish 10Y yield rose 1.7 bps to 0.3%

Top Overnight News from Bloomberg

  • The Federal Reserve’s new approach to setting interest rates will probably be hard to divine from the economic projections it’s set to publish on Wednesday
  • The head of macro strategies at Record Currency Management is shorting government bonds of Spain, France and Italy -- as well as the euro itself -- on the expectation that Turkey’s market ructions will soon be felt on the balance sheets of European banks
  • Barclays Plc asked Pritpal Gill, head of foreign exchange trading in Asia Pacific, to leave after about 18 months with the British lender

A quick look at global markets courtesy of NewsSquawk:

Asian equity markets were somewhat mixed as the region only partially sustained the momentum from the firm handover from the US where the tech sector resumed its outperformance and sentiment was underpinned by vaccine and M&A developments. ASX 200 (-0.1%) was indecisive and only briefly benefitted from the announcement to ease regional Victoria coronavirus restrictions, with strength in tech and mining stocks offset by losses in energy and financials, while Nikkei 225 (-0.4%) underperformed as exporters suffered from the ill-effects of a firmer currency and with Sony shares pressured by reports it is to reduce its PS5 sales forecast by 4mln units due to chip supply issues. Hang Seng (+0.4%) and Shanghai Comp. (+0.5%) eventually gained following a CNY 600bln MLF announcement by the PBoC and better than expected Chinese data where Industrial Production and Retail Sales both topped forecasts. In addition, China announced to extend tariff exemptions for 1 year on imports of some US products which were due to expire tomorrow, although the support for stocks was limited as uncertainty regarding TikTok remained given the no-algorithm inclusion aspect of the deal and with the US to block imports of cotton, linen, hair products and computer parts made by specific entities in Xinjiang. Finally, 10yr JGBs were flat following similar rangebound trade in T-notes, while firmer demand at today’s enhanced liquidity auction for long-end JGBs only mildly supported as price action was once again hampered by resistance at the 152.00 level.

Top Asian News

  • Chinese Consumers Join Industrial Recovery From Covid-19
  • China Gives Markets Just Enough Support, Lets Yuan Strengthen
  • Hong Kong to Reopen Pubs, Pools and Theme Parks From Friday
  • Singapore Trader Rhodium Sued by Maybank for $3 Million Payment

Europe saw an uninspiring cash open following a mixed APAC handover, but thereafter upside momentum seeped into the markets (Euro Stoxx 50 +0.6%) – with little by way of fresh catalysts to shift the dials ahead of the FOMC policy decision tomorrow. Nonetheless, performance across bourses remain mixed but tilted to the upside, with the DAX (+0.2%) the laggard in the region whilst IBEX (+1.6%) leads the gains, propped up by solid gains in index heavyweight Inditex amid broader consumer discretionary outperformance, with the sector underpinned by H&M (+13%) after a well-received trading update. Sticking with sectors, material names are supported by the USD-induced gains in copper coupled with strong Chinese data and a slew of broker upgrades for the UK mining sectors; for the likes of Anglo American (+2.4%), Glenore (+2.8%), BHP (+2.5%), Rio Tinto (+2.82%), Fresnillo (+0.6%) and Polymetal (+0.8%). To the downside, Financials are weighed by the European banking sector consolidation, with Spanish banks pressured after Caixabank (+0.9%) is said to be mulling a EUR 4bln bid for Bankia (-0.9%) vs. current market cap EUR 4.2bln, whilst UBS (-1.5%) threatened to move its HQ to Frankfurt if officials were to forbid a merger with Credit Suisse (-2.0%). In terms of other individual movers, Fiat Chrysler (+7.1%) has benefitting from a revision of its planned merger with PSA (-0.9%) which includes dividend cut in order to keep cash inside the merged entity. This has also weighed on the likes of Faurecia (-6.5%) as PSA is the majority shareholder in the group, will in turn delay the planned spinoff of Faurecia until after the mergers’ closing. Finally, Carrefour (-2.5%) shares remain on the backfoot after Credit Agricole corporate and investment bank launched the disposal of around 3.1% of Carrefour share capital.

Top European News

  • Panetta Says ECB Needs to Remain Vigilant on Inflation Outlook
  • Trial Against Carlos Ghosn Begins as Kelly Faces Charges Alone
  • U.K. Says ‘No Magic Solution’ for Struggling Covid Test System
  • William Hill Soars to 22-Month High; Partner Signs ESPN Deal

In FX, in contrast to yesterday, news that COVID-19 restrictions have been eased in the state of Victoria allied to a relatively upbeat economic assessment in the RBA minutes have boosted Aud/Usd and Aud/Nzd from sub-0.7300 and circa 1.0860 respectively, while the ongoing appreciation of the Yuan (CNY and CNH both through key resistance at 6.8000 vs the US Dollar) following stronger than expected Chinese data (ip and retail sales) has also propelled the Aussie a bit further than the Kiwi as Nzd/Usd pivots 0.6700 before Q2 current account data.

  • GBP - Encouraging UK labour market metrics and some LHS interest in the Eur/Gbp cross appear to be propping up the Pound rather than safe enough passage of the IMB through parliament last night, as Cable bounces from the low 1.2800 zone to retest 1.2900 and Sterling takes another look at bids/support protecting 0.9200 vs against the Euro. However, the 200 WMA at 1.2933 still poses a technical hurdle if 1.2900 is breached again and market contacts suggest a breach of 0.9200 may be shallow given ongoing no deal Brexit risk.
  • CHF/EUR - Also firmer vs the Greenback, with the Franc holding near the top of a 0.9090-55 range and undeterred by more deflationary Swiss import and produce prices, while the Euro trades closer to 1.1900 than 1.1850 amidst decent option expiry interest (1 bn between 1.1900-10, 1 bn at 1.1885 and 2.4 bn at 1.1850) and underpinned by ZEW readings beating consensus comfortably.
  • CAD/JPY/USD - The Loonie and Yen are narrowly mixed against the Buck, as Usd/Cad straddles 1.3150 in advance of Canadian manufacturing sales and Usd/Jpy hovers below 106.00 before several US data points and Japanese trade ahead of the Fed. Meanwhile, the DXY is tethered to 93.000 awaiting impetus in the run up to the FOMC or via fresh guidance and SEP forecasts in the newly adopted flexible AIT era.
  • SCANDI/EM - Moderately firmer oil prices and risk sentiment overall appear to have nudged the Norwegian and Swedish Crowns off Monday’s lows instead of data in the form of a wider trade deficit and fractionally softer than anticipated SA unemployment rate respectively. Moreover, improvements in the latest Norges Bank regional survey and the Riksbank rolling out Usd swap agreements until the end of Q1 next year may be keeping Eur/Nok and Eur/Sek capped at 10.7000 and 10.4000. Conversely, Turkey’s Lira is struggling to rebound after slipping briefly and marginally beneath 7.5000 as EU’s Borell warns that the country’s future relationship with the bloc is on the line. Elsewhere, the Rand will be eyeing SA business confidence for more pre-SARB pointers.

In commodities, WTI and Brent front month futures have been on an upward trajectory in the latter part of the European morning as traders balance the supply and demand implication arising from developments in the Gulf of Mexico alongside a resurgence of the pandemic ahead of the JMMC meeting on Thursday. In terms of the breakdown, the supply side sees disruptions from the myriad of hurricanes and tropical storms developing in the Atlantic, with Hurricane Sally the most pertinent as it is poised for landfall in the Gulf later today – with BSEE yesterday estimating that that approximately 21.39% of the current oil production and ~25.28% of the natural gas production in the Gulf of Mexico has been shut-in, with today’s update due at 1900BST. Sticking with supply side, sources yesterday suggested the OPEC+ meeting is unlikely to advocate deeper oil output cuts, with Saudi to reportedly not looking to lift oil prices, in-fitting with recent source reports via the FT. Moving to demand, the IEA cut its 2020 global oil demand growth forecast by 200k BPD, citing resurgence of COVID-19 cases, local lockdown measures, remote working and weak aviation for the downgrade. The agency also expects the recovery in oil demand to decelerate markedly in H2 this year. The report aligned itself with both the OPEC and EIA STEO, with OPEC and IEA also highlighting the renewed weakness in the Indian markets dragging on demand. Nonetheless, WTI resides around USD 38/bbl (vs. low 37.06/bbl) while its Brent counterpart regains a footing above 40.00 (vs. low 39.39/bbl). Elsewhere, spot gold and silver derive support from the softer USD to eke mild gains around USD 1960/oz and above USD 27/oz respectively. In terms of base metals, LME copper is supported and Shanghai copper was underpinned by the strong Chinese industrial production data and the recent gains in the stock markets, whilst Dalian iron ore futures came under pressure from lower Chinese steel margins.

US Event Calendar

  • 8:30am: Empire Manufacturing, est. 6.8, prior 3.7
  • 8:30am: Import Price Index MoM, est. 0.5%, prior 0.7%; YoY, est. -2.1%, prior -3.3%
  • 8:30am: Export Price Index MoM, est. 0.4%, prior 0.8%; Index YoY, est. -3.2%, prior -4.4%
  • 9:15am: Industrial Production MoM, est. 1.0%, prior 3.0%; Capacity Utilization, est. 71.35%, prior 70.6%

DB's Jim Reid concludes the overnight wrap


I’ll be publishing my monthly chart book later today so please keep an eye out for that. We released a single off this new album yesterday and previewed our “Print money not babies” chart which basically reinforces our long standing view that money printing is going to increase for years to come unless in part we can magic up more people in the generations behind us. See the CoTD here and a reminder that if you want it straight to your mailbox daily please email Also a reminder that we published our annual long-term study last week. This year’s is entitled “The Age of Disorder” (link here).

It was “Merger Monday” in markets yesterday which must mean its “Takeover Tuesday” today? What will Wednesday welcome? Anyway, this M&A theme helped kick US equity markets off on a strong footing ahead of tomorrow’s Federal Reserve decision, as the S&P (+1.27%) and the NASDAQ (+1.87%) both saw major gains. The NASDAQ particularly benefited from the large M&A deals in Tech and Biotech, the two biggest components of the index. Although tech stocks led the advance, every sector in the S&P and 90% of all stocks in the index moved higher on the day. Meanwhile the VIX volatility index fell -1.0pts to 25.85, a lower mark than when the S&P hit record highs back on 2 Sept.

Oracle (+4.32%) had a good day after press reports (per Bloomberg) said that the company had reached a preliminary agreement in its bid for TikTok’s US operations, while Immunomedics was the top performer in the NASDAQ, seeing a massive +97.99%% advance after Gilead Sciences agreed to acquire the company for $21bn. Softbank remained in the tech headlines after agreeing to sell its chip division Arm Ltd. to Nvidia for $40bn. Nvidia, the seventh biggest company in the NASDAQ, rose +5.82% on the news. As has generally been the case this year however, European equities lagged behind, with the STOXX 600 up just +0.15% in spite of the tech outperformance there as well.

There were M&A headlines in Europe as well in the form of the perennial UBS / Credit Suisse merger story. The story emanated from an Inside Paradeplatz story, a Swiss Finance blog, claiming that the Chairmen of both banks are working on it together and had discussed the idea with the Swiss Finance Minister Maurer. Shares of Credit Suisse (+4.33%) and UBS (+2.47%) rose more than the Euro banking sector (+0.96%) – of which they are not eligible of course – on the reports.

On the coronavirus, there was mixed news on the vaccine front. AstraZeneca have restarted their trials in the U.K. (as we discussed yesterday), after an 8 day delay due to a subject falling ill, though the U.S. trial could remain on hold through midweek pending its independent probe. Separately, Pfizer CEO Bourla saw his weekend comments that it’s “likely” that the U.S. could deploy a vaccine before year-end expanded upon. He added that Pfizer and Germany partner, BioNTech, have a 60% chance of having an idea on the efficacy by the end of October.

Any positive vaccine news will be welcome as restrictions are once again being enacted as caseloads rise. France had over 6000 new cases on Monday, with Marseille and Bordeaux limiting public gatherings for individuals to 10 people or fewer, while the limit for large outdoor gatherings such as sporting events and concerts have been lowered to 1000 from 5000 people. Both regions are outlawing standing outdoor bars and will be shutting down bars and restaurants that are not strictly observing and enforcing distancing guidelines. Weekly cases in France are now up to 58,400 compared to a high of 41,000 back in April. Here in the UK the new guidelines restricting gatherings to no more than 6 people in both indoor and outdoor settings went into place yesterday as weekly cases are now over 21,000 for the first time since mid-May. Meanwhile Israel’s cabinet have voted to enact a second national lockdown starting at the end of this week as the country is currently seeing 25,000 new cases a week, compared to 12,000 weekly cases at the start of September. Cases in the US continue to fall as the major hotspots see cases coming back under control, however the weekly cases (243,800) have still not fallen under the highs of the first wave (217,700). Though as we have noted in the past the second wave saw fewer hospitalisations than the first, see the aforementioned upcoming chartbook for more on this.

Overnight we have seen China’s August economic data with retail sales (at +0.5% yoy vs. unchanged expected) and industrial production (at +5.6% yoy vs. +5.1% yoy expected) both beating expectations and thereby underscoring a rebound in economic activity due to fiscal stimulus and strong exports. Meanwhile the surveyed jobless rate came in line with expectations at 5.6% and YtD fixed asset ex rural were a touch better than expectations at -0.3% yoy. The Hang Seng (+0.57%) and Shanghai Comp (+0.28%) are advancing this morning on the back of these data beats. Other bourses in the region are trading a bit more mixed with the Nikkei (-0.56%) and Asx (-0.17%) both down while the Kospi (+0.64%) is up. In FX, all G-10 currencies are up against the greenback with the euro advancing +0.20% to 1.1890 and the onshore Chinese yuan up +0.35% to 6.7868, the highest level since May 2019. Other EM currencies are also trading up. Futures on the S&P 500 are up +0.17% this morning.

While we’re on Asia, in Japan just after we went to print yesterday the ruling Liberal Democratic Party’s leadership election was won by chief cabinet secretary Yoshihide Suga, in line with expectations. Suga won more than 70% of the available votes, and is now almost certain to replace Shinzo Abe as Prime Minister in a parliamentary vote tomorrow, with the new cabinet also expected to be announced the same day. Meanwhile overnight reports (per the Nikkei newspaper and Nippon TV) are suggesting that incumbent Finance Minister Taro Aso will keep his post in new cabinet. Aso has served as finance minister since the start of the Abe government in late 2012 and keeping him on would reinforce Suga’s message that he intends to keep the main policies of the outgoing Abe administration. Elsewhere, Aso has said overnight that the incoming government should consider calling an early election given plans to hold the postponed summer Olympics next year.

Staying on politics, Brexit got further attention yesterday, as the House of Commons began debating the Internal Market Bill, which passed its second reading vote by 340-263. However, that included 20 Conservative MPs who rebelled/abstained, including former Chancellor of the Exchequer Sajid Javid, who said “It is not clear to me why it is necessary for the UK to break international law”. For those who haven’t been following this as closely as us in the UK, the controversy behind this bill is that elements of it would allow the government to override parts of the Brexit Withdrawal Agreement reached with the EU, and hence break the UK’s international treaty obligations. The EU have given the UK until the end of the month to withdraw the relevant measures, but the UK government have shown no sign of backing down thus far, in spite of the fact that every former UK Prime Minister has now offered at least some criticism of the measures, albeit of varying degrees. Having passed its second reading, the bill now goes into committee stage from today and carries in into next week, during which amendments can be made by MPs. An important one there to look out for will be that from Tory MP Bob Neill, which would add the requirement that the House of Commons approve any measures before the government could decide to override the Northern Ireland Protocol in the Withdrawal Agreement.

On yesterday’s meeting between the EU and China over a trade deal, Xinhua has reported overnight that President Xi Jinping agreed that both sides need to “accelerate” the negotiations for the deal but shrugged off Europe’s “lecturing” over human rights issues and doubled down on the stance that any criticism of China’s policies in Xinjiang and Hong Kong is meddling in China’s internal affairs. Meanwhile, the EC Chief Ursula von der Leyen said of the meeting that “China has to convince us that it is worth having an investment agreement,” and the EU summit chair Michel told reporters that Xi Jinping appeared to be willing to allow visits by diplomats into the far western province of Xinjiang, however, details of this need to be worked out.

Turning back to yesterday and core sovereign bonds fell on both sides of the Atlantic, with gilts seeing the largest move as 10yr yields rose +1.2bps. Otherwise, yields on 10yr Treasuries (+0.7bps) and bunds (+0.1bps) all moved just slightly lower. Safe havens elsewhere advanced, with gold (+0.84%) recording its strongest performance in 2 weeks, and platinum (+2.88%) seeing its best day in a month. Oil lost ground however, as Brent crude (-0.55%) closed at its lowest level in 3 months.

There wasn’t a great deal of data yesterday, though we did get Euro Area industrial production for July, which saw a +4.1% increase (vs. +4.2% expected). That still leaves IP down -7.7% year-on-year however, compared to the -2.2% yoy decline in February, so there’s still some way to go before reaching pre-Covid levels again. Otherwise, the Bank of France’s industry sentiment indicator rose to 106 in August, its highest level since May 2017.

To the day ahead now, and today’s data highlights include the UK labour market statistics, the German ZEW survey for September, and Canadian manufacturing sales for July. Meanwhile from the US, we’ll get the Empire State manufacturing survey for September, as well as industrial production, capacity utilisation and the import price index for August. Otherwise, the ECB’s Panetta will be speaking.

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Revenge travel is coming to an end, says industry CEO — a recession will replace it

The CEO of Intercontinental Hotels Group says that the world has moved beyond revenge travel–even China.



Maybe revenge isn't so sweet anymore. Not so long ago the term "revenge travel" was making the rounds. The idea was that people were so fed up with the covid-19 pandemic lockdown that they packed their bags and took off for just about anywhere once travel restrictions started to ease.

Related: Delta adds a route U.S. tourists have been begging for

Last year, travel insurance company Allianz Partners projected that travel to Europe would soar 600% over 2021. “The pandemic made people realize you can't take travel for granted and many Americans are eager to visit Europe this summer,” Daniel Durazo, director of external communications at Allianz Partners USA, said in an April 2022 statement.

'Last stage of pent-up demand'

The Summer of '23 was also pretty strong, according to a survey by the Federal Reserve Bank of New York, which found that almost a third, or 32.8%, of all U.S. households took a vacation between May and August, up from 28.5% in August 2022 and a record high in data going back to 2015. However, it looks like the revenge travel upswing is coming to an end. The Federal Reserve's Beige Book said in September that consumer spending on tourism was stronger than expected, "surging during what most contacts considered the last stage of pent-up demand for leisure travel from the pandemic era." Elie Maalouf also thinks that the revenge travel dish has gone cold. The CEO of Intercontinental Hotels Group  (IHG) - Get Free Report said in an interview with CNBC that he believes pent-up demand is over. "People started traveling really by the end of 2020 as restrictions started to lift,” he said. “So we’re really past revenge travel — even in China.” Intercontinental Hotel Group operates hotels under several brand names, including Regent, Crowne Plaza, Holiday Inn Club Vacations, and Candlewood Suites. The company’s latest quarterly update showed travel demand remained strong during the close of the summer travel season. “We think we’re in a sustainable place,” Maalouf said. “Our bookings for groups and meetings going into 2024 and beyond are the strongest we’ve seen in a very long time.”

Average room rates increase

IHG’s third quarter trading update showed the company’s revenue per available room — or “revpar” — was up 10.5% compared to third quarter 2022, and nearly 13% higher compared with the third quarter of 2019, which was before the pandemic. This is despite a 3% drop in revpar, compared to 2019, in large cities in Greater China, which are more dependent on international travelers. Maalouf said that lack of “airlift,” or flight capacity, into China is below 50% of prepandemic levels, which is affecting travel recovery in cities like Beijing, Shanghai, Guangzhou and Shenzhen. “But if you look at the country as a whole, travel — which is mostly domestic in China — it’s recovered well above 2019,” he said, adding that more than 80% of IHG’s business in China is in mid-sized to smaller cities. Occupancy levels in the third quarter at IHG hotels was 72% — just 1% shy of pre-pandemic levels, according to the quarterly update. But average room rates have jumped well above 2019 levels — up nearly 6% in Greater China, 15% in the Americas, and 24% in Europe, Middle East, and Africa (EMEA) and Asia. But rising rates are barely keeping up with inflation, said Maalouf. “Room rates have not really exceeded inflation in any of our markets,” he said. “I think people’s willingness to travel is exhibited by the fact they’re willing to pay.” Get investment guidance from trusted portfolio managers without the management fees. Sign up for Action Alerts PLUS now.

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Spread & Containment

How Novo Nordisk’s Rybelsus went from pandemic washout to blockbuster amid the GLP-1 boom

Novo Nordisk’s Rybelsus pill was long expected to be a hit out of the gate.
The Danish drugmaker cashed in a priority review voucher in early 2019 for…



Novo Nordisk’s Rybelsus pill was long expected to be a hit out of the gate.

The Danish drugmaker cashed in a priority review voucher in early 2019 for what would be the first oral GLP-1, primed by positive studies showing reduced blood sugar in patients with type 2 diabetes. Analysts and company insiders anticipated blockbuster status for the oral version of semaglutide, with peak sales expected to hit up to $5 billion — and potentially follow the trajectory of its sibling injectable Ozempic, which reached $1.6 billion in sales in less than two years.

Camilla Sylvest

“We have another monumental event with the world’s first oral GLP-1,” commercial strategy chief Camilla Sylvest said in November 2019. “This is not just a compressed pill. This is a pill that has a clinical profile to compete and [that has] the oral administration to compete. It’s an unbelievable opportunity for us.”

But then health officials declared the Covid-19 pandemic in March 2020, and everything changed. Novo’s sales reps couldn’t do in-person meetings. No commercial advertising shoots were allowed. Patients scrapped going to the doctor for elective purposes. As Novo’s launch plans crumbled, so did the promise of Rybelsus.

Three and a half years later, amid a frenzy of all things GLP-1, Rybelsus has come back to life — albeit slowly, and with skepticism over its efficacy for weight loss compared to injectables.

There’s fresh enthusiasm for other oral GLP-1s in development, and Ozempic, approved for type 2 diabetes, is now a household name. That’s in part because people have been taking Ozempic — and more recently, Rybelsus — off-label for weight loss amid shortages of Wegovy, the injectable version of semaglutide approved for obesity. But there are also concerns about tolerability in a market that’s increasingly crowded.

The pandemic disruptor

Back in late 2019 and early 2020, everything was going as planned for Rybelsus. The FDA approved the pill in 3 mg, 7 mg and 14 mg doses. Novo had expanded its manufacturing facilities in North Carolina, and it was working on plans for a broad direct-to-consumer ad campaign, including mainstream TV commercials.

The company was so confident that it priced Rybelsus on par with Ozempic at about $770 per month, to the surprise of some analysts at the time. The commercial strategy was to market its GLP-1 drugs side-by-side, positioning Ozempic as the first and preferred injectable for type 2 diabetes and Rybelsus as the first and preferred oral medication, Sylvest and then-chief scientific officer Mads Krogsgaard Thomsen said in an investor call, according to AlphaSense transcripts.

Mads Krogsgaard Thomsen

“With our two recent GLP-1 products, Ozempic and Rybelsus, we want to redefine type 2 diabetes treatment,” Novo wrote in its 2019 annual report. “We are at the forefront of innovation in the GLP-1 class and orally administered delivery devices and are pursuing several therapeutic opportunities with semaglutide.”

But then came Covid, and Novo had to switch gears from the splashy DTC ad campaign to animated work with an upbeat soundtrack that eventually debuted in the autumn of 2020. For the first six months of that year, Rybelsus brought in just $92 million.

By 2022, however, it rang up sales of $1.7 billion, more than twice its 2021 total, likely fueled by the demand for semaglutide sibling brand Wegovy, which was approved to treat obesity in mid-2021. Novo is reporting Q3 sales next week, with Rybelsus likely on track to top $2 billion in sales this year. Novo declined comment for this story, citing its quiet period ahead of its Q3 earnings release.

Off-label for weight loss

As Wegovy took off and supplies waned, clinicians used their off-label prescribing power to redirect desperate obesity and overweight patients to Ozempic.

Some physicians turned to Rybelsus. Tracking off-label prescribing is difficult, but data show that there were 157,500 Medicaid prescriptions for Rybelsus for weight loss in 2022. In the same year, Wegovy had 30,100 Medicaid prescriptions for weight loss, while Eli Lilly’s type 2 diabetes treatment Mounjaro had 30,700, according to a KFF analysis in August. Ozempic was the lead seller among Medicaid populations, at more than 978,000 prescriptions.

That said, Rybelsus does not seem to be as effective at weight loss as the other approved GLP-1s.

Diana Thiara

Diana Thiara, medical director of the University of California, San Francisco’s weight management program, calls the new GLP-1 meds in general “amazing,” citing an example of a patient taken off a lung transplant list after losing weight and improving lung function. But she also acknowledges the social trends driving low-dose oral uptake by “people so desperate to lose weight.”

“I have one patient who can’t even use our MyChart electronic health communications, but tells me about what Reddit says,” she said. “Reddit and TikTok people say stuff, but that’s not really what the evidence shows right now.”

Rybelsus’ current highest dose is equivalent to Ozempic’s lowest dose, though some experts say the lower doses can still help patients lose weight.

“The lower doses, based on my experience, are effective for weight loss,” said Kristin Baier, clinical director at Calibrate, a telehealth weight loss startup founded in 2020. “When used along with lifestyle changes, we have seen patients achieve up to 20% weight loss on the lower doses of oral semaglutide.”

The future of oral GLP-1 weight loss drugs

Novo is currently testing higher doses at 25 mg and 50 mg doses of Rybelsus in the Pioneer Plus (with type 2 patients) and Oasis (with people with overweight or obesity) trials against the 14 mg currently approved by the FDA. The results, published this spring and summer, show up to 15% bodyweight loss, which is on par with Ozempic and Wegovy.

Clinicians are also encouraged by differentiated competing oral candidates, like Pfizer’s danuglipron and Lilly’s orforglipron, both in Phase II trials. The candidates are non-peptide GLP-1s and can be taken with food. Rybelsus is directed to be taken on an empty stomach with small sips of water and a wait time of 30 minutes before other medications or food.

“With Novo Nordisk expected to file for the higher dose approval, I believe there’s going to be an uptake that hopefully would help with some of the manufacturing supply issues we see [with injectable semaglutides],” said Weight Watchers medical director Spencer Nadolsky. “It will be nice to have the larger dose option when it’s available.”

Yet, it’s not all upside on the weight loss front for Rybelsus.

“It’s equivalent to a pretty low dose of Ozempic. So in terms of weight loss, we don’t see much weight loss in terms of the average person at that dose of Rybelsus,” Thiara said.

She also has some concerns about the higher doses and gastrointestinal issues and tolerability.

“People just seem to have more side effects with oral Rybelsus than they do with the equivalent Ozempic dose,” Thiara said, adding that she does think it will be approved. “But head-to-head right now, with no supply chain issues and if 50 milligrams was on the market and I had a patient who was open to anything injectable or oral, I would probably skew towards injectable.”

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Spread & Containment

Popular mall retailer Express facing potential Chapter 11 bankruptcy

The brand has seen its sales fall and its costs rise dramatically which has caused it to fall behind on some bills.



The Covid pandemic hit malls hard. Even when they were allowed to operate, many people did not want to be confined in a tight space with other people breathing near them.

Mask rules and social distancing requirements made the once-fun experience of just wandering around a mall a whole lot less fun. Even when vaccines were introduced and life returned mostly to normal, some malls — generally the weaker ones before Covid — continued to struggle. 

Related: Beloved discount retailer faces significant bankruptcy risk

So far, no major mall-based retailer has filed for a post-Covid bankruptcy. Bed Bath & Beyond, Christmas Tree Shops, and Tuesday Morning, all of which went bankrupt and were liquidated, generally were located in strip malls. The same is true for Party City and David's Bridal, two chains that managed to survive their Chapter 11 filings.

But, mall retailers are not immune from the problems caused by Covid, where sales dropped to near zero for months, but expenses did not go away. That led to increased debt.

The pandemic also changed consumption habits. Some people still work from home full time and many Americans are now in hybrid work situations. That has changed their wardrobe needs and that's bad news for certain retailers, including Express, a mall favorite with over 500 stores nationwide.     

"Express is truly on a respirator and teetering on possible bankruptcy,” Shawn Grain Carter, a retail consultant and Fashion Institute of Technology professor, told RetailDive.

Some malls have seen smaller crowds, but that is not universal.

Image source: Getty Images

Express is struggling in many ways

Express has seen its sales fall and its cost rise,

The retailer’s consolidated net sales dropped 6.4% to $435.3 million, according to its second-quarter earnings report. In addition, the company’s selling, general, and administrative expenses have increased to $146.1 million (33.6% of net sales) compared to the second quarter in 2022. 

Perhaps most damningly, the chain's debt has consistently grown. In fact, its total debt was $220.8 million at the end of Q2 2023, compared to $202.2 million at the end of Q2 2022 and $122 million at the end of Q4 2022. 

"Over the last few months, speculation has been mounting about apparel retailer Express’ financial state. While some might speculate that one big thing has caused the retailer’s failure, that’s just not how bankruptcies work. Several things have been going wrong over a prolonged period," Matthew Debbage, Creditsafe CEO of the Americas and Asia, told TheStreet via email.  

According to Creditsafe data, 35% of the company’s owed payments are past due, which amounts to over $3 million.

"On top of this, Creditsafe data reveals that the value of these late payments is well over $3 million. While this might not seem like a big chunk of money compared to Express’ annual revenue, the fact that the retailer’s DBT (Days Beyond Terms) has increased consistently for the last six months indicates that its cash reserves are likely low, which will only drop even lower if sales continue to decline, operating costs keep rising and its debt load grows," he said.

It's a slowly rising tide that could ultimately swallow the company.

"When you combine all these factors, I can see why some analysts are speculating that the company could be at high risk of bankruptcy," he wrote.

Debbage believes the company should be taking steps to prepare for a Chapter 11 filing (even if it ends up not needing one).

"What Express needs to be thinking about right now is how it can cut operating expenses with a recession looming and consumer spending expected to drop significantly," he wrote. "The retailer’s finance leadership should also be prioritizing data, analytics and technology to make sure it has the right financial data so it can get a clear picture of its financial affairs, especially if it tries to secure financing to stave off bankruptcy."

Express did not return an immediate request for comment sent to its investor relations email.

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