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Healthcare Agency Roundtable 2022: Uncertainties of 2023: Looming recession, inflation, and reduced investment

Part II: Leaders in healthcare marketing and communications discuss the looming concerns regarding the healthcare ecosystem.

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Healthcare Agency Roundtable 2022: Uncertainties of 2023: Looming recession, inflation, and reduced investment

By Maria Fontanazza • maria.fontanazza@medadnews.com

What changes in the healthcare ecosystem are you most concerned about in the coming year? 

Minnie Damle, Brick City Greenhouse

Minnie Damle, SVP, Human Resources, Brick City Greenhouse: With the looming recession, clients are now having to rethink how they spend their budget and where money should be allocated. The advantage Brick City Greenhouse has is that we’re not modeled like a big holding company agency. We can bring in very unique and personalized solutions to meet the needs of businesses, while providing high quality and value that allow clients to also balance their budgets.

Fred Kinch, Brick City Greenhouse

Fred Kinch, Brick City Greenhouse

Fred Kinch, Founder, Content Lead, Brick City Greenhouse: With the recession in mind, as a fully independent agency without any kind of private equity backing or outside influence, we’re very, very flexible in being able to work with our clients and respond as their financial needs change through 2023 and going into 2024. We’re able to be very responsive and flexible in terms of how we work with them, how we handle their billing, how they stretch their dollars, and can help them preserve as many resources as possible while still getting the most impact in the marketplace.

Chris Ozanian, JUICE Pharma

Chris Ozanian, JUICE Pharma

Chris Ozanian, Chief Experience Officer, JUICE Pharma: The past 18 months post-COVID have seen a profound acceleration in healthcare transformation that we do not see slowing down anytime soon. Two technologies together – predictive AI and the expansion of health IoT (internet of things) – are revolutionizing the way patients, and their physicians, are engaging in health management. Putting data privacy aside for the moment, the proliferation of health sensors on devices like the new Apple Watch, other passive health monitors and connected home devices (even those in newer cars) combined with predictive AI cloud services allows for the personalization of the health experience. By passively and actively collecting health data, your phone now becomes a virtual caregiver that adjusts based on your daily behaviors and ongoing goals. This pervasiveness creates a personalized Health OS per se that will make a real impact in changing health behavior. The same can be said on the clinical side, where cloud-based health data collected via consumer and medical monitoring devices is actively being used for remote or hospital-based patient monitoring. For lifesciences companies and their agencies this simply cannot be ignored as we are forging ahead in a world where proving the value of a therapy is becoming more crucial in the broadening discussion of health economics and cost of care. 

Kim Wishnow-Per, President, McCann Health Managed Markets, An IPG Health Company: As we look to the future, the most recent landmark law will drive behavior changes and uncertainty across healthcare stakeholders. Nearly half of Americans are covered by Medicare or Medicaid, making the U.S. government the single largest payer. The government’s role in healthcare has been increasing over time in tandem with the growing cost of healthcare and the public interest in access, quality, and affordability. 

Kim Wishnow-Per, McCann Health Managed Markets

Kim Wishnow-Per, McCann Health Managed Markets

The Inflation Reduction Act (IRA), signed into law by President Biden in August of 2022, is poised to transform numerous aspects of prescription drug pricing in the Medicare program. The government’s new ability to negotiate prices for some drugs covered under Medicare and the inflation rebate provision may trigger changes that could increase price discounts on pharmaceuticals, causing drug manufacturers to potentially reduce funding for the development of new drugs, thus slowing innovation. 

Although the IRA will likely benefit select populations, healthcare access and affordability remains uncertain in other channels, such as: cost reductions recognized by the Medicare program could shift onto consumers with private health plans, resulting in higher costs to employers and employees, and the adoption of alternative payment models may increase dramatically as the balance between costs and quality of care continues to intensify, driving potentially tighter utilization management in certain therapeutic areas. 

It is clear the drug pricing reform provisions in IRA will transform how Medicare pays for drugs and provide financial benefits to seniors. However, the pharmaceutical industry will largely bear the brunt of these changes, potentially causing downstream effects on the interconnected healthcare ecosystem. 

Jon Koch, Chief Executive Officer, Fishawack Health: One of the most significant challenges facing our clients today and future is the introduction of the U.S. government’s Inflation Reduction Act (IRA), which will include value assessments later in the life cycle and will give Medicare more power to negotiate pricing. Our interdisciplinary teams in Consulting, Policy; Value, Evidence, and Access; Medical, and Marketing are coming together to support our clients in navigating the challenges emerging from this shift in U.S. policy.

The impact of the IRA will reach beyond Medicare services and the U.S., in which Medicare already accounts for more than 30 percent of national prescriptions. Across the industry and the globe, we have already seen companies re-evaluate their portfolios and pipelines, reducing investment in certain products and therapy areas as result of the legislative changes.

Jon Koch, Fishawack Health

Jonathan Koch, Fishawack Health

The programs most impacted by IRA include small molecules, lifecycle management programs, and diseases affecting the elderly. The impact on portfolios will be significant for many companies and there are concerns that this could hamper innovation. The IRA will undoubtedly create further pressure for emerging biotechnology companies who have already had a tough year when trying to raise capital — with the IRA potentially impacting their strategy for their next round of investment. Alongside assessing their asset strategy, pipeline, clinical strategy, and portfolios, many will need to assess their overall revenue expectations and commercialization strategy, deciding whether to partner or to go alone and if they should focus on the US or the rest of the world. We are working with both our biotech and pharmaceutical clients to support them in overcoming these challenges.

For both established and emerging biopharmaceutical companies, we may see more investment in complex therapeutics and rare diseases, which are less likely to be impacted by the legislative changes. We may also see drug developers evolve their life cycle management approach to prioritize multiple assets with a few targeted indications and launch in multiple indications simultaneously, as well as in more defined patient populations.

The IRA will lead to a rethinking the commercialization model. Manufacturers will also need to make tough decisions about whether they should commercialize all their products and indications in the U.S. and strategies for reducing operational costs. We are collaborating with colleagues at Avalere Health, who specialize in US policy, to develop value assessments and conduct robust scenario planning for our clients. With these insights and tools, we are guiding clients on the type of assets to develop, the optimal indications to pursue, along with the appropriate go-to-market strategy for commercialization.

From a marketing perspective, in the coming years we may see more appetite for innovative, digital-first launches and omnichannel strategies, which can be less costly to implement, drive efficiency, and maintain operating margins, but also give biopharmaceutical companies greater capabilities for reaching their target stakeholders. As a result, marketers should begin to consider their digital ecosystem and how well-equipped they are for delivering these personalized and connected experiences.

Our steadfast advice for our clients is to remain pragmatic, taking a considered approach to ensure new opportunities that may emerge from the policy and competitors’ actions in response to the policy aren’t missed. 

Michelle Whitlock, Ogilvy Health

Michelle Whitlock, Ogilvy Health

Michelle Whitlock, EVP, Specialized Engagement Solutions, Ogilvy Health: Like the vast majority of Americans, I am watching my living expenses increment – or leap – northward thanks to inflation, while simultaneously handling the caretaking of a senior parent on a fixed income. So, I often think about the difficult choices and trade-offs people are likely to have to make in the coming year when deciding between paying for the general necessities and then also paying for needed medications. This is a harsh reality that will reach far beyond the elderly and those in vulnerable populations and will become manifest for even middle-income families. Layer on the pressurized financial bedrock strata of rising chronic illness, increased mental health challenges, and the emerging long-term effects of COVID, and we have a looming medication fill and adherence crisis with life-altering or even life-threatening repercussions on our hands. What is our responsibility as medical marketing professionals in the face of this unstable dynamic? What role can we play in mitigating its worst effects? One answer lies in ensuring that information about affordability and adherence assistance programs are amplified and ubiquitous, and that no stone is left unturned in educating patients and providers about support options.

According to IQVIA, pharmaceutical manufacturers spend $14 billion on patient support and adherence programs each year. Despite this investment, patient awareness is very low. In a survey of 12,000 patients conducted by Accenture, only 16 percent of patients were aware of available support programs. We need to find innovative approaches and under-utilized channels to amplify this information. For example, Pharma should harness the opportunity presented by the shifting consumer social ecosystem and reach consumers where they are today – notably TikTok, Reddit, and other non-traditional marketing platforms. We also see live or telehealth point-of-care engagement as an educational opportunity that often goes underutilized. There is a significant opportunity to drive financial assistance and enrollment into patient support programs at the point of prescribing in the electronic health record. Healthcare providers can send money-saving offers and enrollment tools to patients directly via SMS with the click of a button while sending a prescription to the pharmacy. Much more can, should, and needs to be done to help patients afford, fill, and stay on their medications. Reaching patients with programs that can help them weather economic uncertainty should be an urgent priority, and our collective creativity as healthcare marketers has never been more sorely needed. 

Mike Myers, Managing Director and Partner, CrowdPharm: My biggest concern is the ongoing focus on removing the tax deductibility of healthcare promotion for pharmaceutical companies. The push in this area is shortsighted in my view. It will hurt broad segments of the industry in the U.S., and ultimately, negatively impact patients who will receive less information on needed healthcare treatments. 

John Guarino, Peregrine Market Access

John Guarino, Peregrine Market Access

John Guarino, President, Managing Partner, Peregrine Market Access: In our minds, the biggest changes are the Medicare reforms associated with the Inflation Reduction Act and the continuation of vertical integration we have seen in the largest U.S. payers and their organizations.

For Medicare, the change that will be impactful isn’t the “new” ability to negotiate pricing for drugs (ask anyone who calls on a Medicare Advantage plan, this has been happening for years), it is the reduction in OOP requirements for patients in the Part D plans. The prescription drug program was a good first step in 2003, but for a long time it was an inadequate benefit for expensive specialty products. Under the new law, the OOPs will come in line with what commercial plans require for specialty drugs.

Also, the continued vertical alignment and consolidation in the top commercial plans will blur the lines not only between commercial and managed government plans but also distribution channels and ultimate access for patients. Previously, things like benefit design, specialty pharmacy, hospital affiliation, and distribution channel were isolated, independent parts of the value chain. The opportunity to streamline access and help patients receive their therapies is significant, but only if we can break down misaligned incentives for each stakeholder.

Christopher Dimmock, AbelsonTaylor

Christopher Dimmock

Christopher Dimmock, SVP, Integrated Strategy, AbelsonTaylor: The Centers for Disease Control and Prevention needs to restore its credibility and trust as a nonpolitical entity. According to a poll conducted last spring by the Robert Wood Johnson Foundation and the Harvard T.H. Chan School of Public Health, only half the citizens of this country trust the CDC and this varies dramatically by political affiliation. 

Unfortunately, American trust in government has suffered significantly in recent years and the charged environment of the global COVID pandemic thrust the CDC into the front lines of partisanship. This environment undermined its role as a scientific policymaker and may have weakened its ability to deliver on its mission and positively influence the well-being of the country. The role of the CDC in the healthcare ecosystem has been obfuscated. For the safety and well-being of the U.S. population, and the healthcare community in particular, the CDC will need to clarify and restore its role as an apolitical trusted entity. Through clear communication and the issue of science-based policy, its mission as “the nation’s leading science-based, data-driven, service organization that protects the public’s health” will help retrieve its leadership and restore confidence in the overall healthcare ecosystem.   

Brian Wagner, VP Product Strategy, CMI Media Group:  Not so much about being concerned, it is more about being aware and ahead of the industry.  We have always looked at ourselves as trailblazers and early adopters to new technology, and seeking newer, interesting, and value-driven, effective options for our clients. Hence, with the end of tracking/targeting cookies on the horizon, we have spent a great deal of time exploring cookieless options that will deliver better value to our clients. We are currently running some cookieless activations, while continuing our exploration into others, with hopes of gaining good insights and learnings enabling us to hit 2023 ready to go with those opportunities that show promise and bring value.  Another example is getting ahead of data privacy legislation that is slowly rolling across the country but may still be years away from a single federal policy. For example, the types of health data that we access, how it is used, the desired outcome, is based on the specific use cases and business objectives. There’s no one solution for all uses. For example, an analysis of the impact of a media campaign uses different data sets and is structured to meet that specific use case. A condition audience model again, different use case, uses different data sets and goes through a rigorous compliance review.

 What is common in these examples is the use of de-identified data, and those analyses being completed in a secure setting, sometimes termed a “clean-room”.  In addition, we do not collect, nor store any PHI data. All our data analyses and use cases are undertaken with great scrutiny, ensuring meeting with data privacy good and best practices as well as following industry guidelines such as Network Advertising Initiative (NAI) guidelines and others.   

Jacob Harrison, Director Ecommerce, CMI Media Group: There are several different factors of concern in the ecommerce ecosystem. The first is inventory control. Ecommerce retailers used to order large amounts of inventory and store on behalf of the client, leaving the client with the revenue from the purchase and without the cost of storing product. With COVID, organizations ordered a lot of inventory concerned with the ability to replenish with shipping restraints. Now, the e-retailer knows this and no longer orders more than they absolutely have to, leaving our clients to hold the bag if they don’t sell-thru product. Inflation is the second area of concern. With the pricing of shipping, storage, etc. going up with rising inflation, will the e-retailer be interested in our product? If price point of the product is not correct and if clients can’t meet promotional opportunities, it is likely that the e-retailer will not continue relationships. Finally, is the e-retailer willing to continue to push into the space? There are a lot of hurdles and compliancy issues both with the federal government and with the consumer that have to be overcome. There has to be a willingness to test and learn and continue to drive the category forward from the e-retailer and from partners like CMI Media Group. With the consumer’s growing concern in regards to use of their PII, it is going to have to be handled in a delicate manner and constantly monitored for feedback to ensure that this work is being done properly.  

Faruk Capan, CEO, EVERSANA INTOUCH & Chief Innovation Officer, EVERSANA: In the coming year, it’s going to be a tougher market for healthcare players. Although pharma isn’t usually hit as hard in a recession, rapidly rising interest rates and inflationary pressure will make capital investments and M&A activities very challenging in the near term. 

Boris Kushkuley, EVERSANA INTOUCH

Boris Kushkuley, EVERSANA INTOUCH

Boris Kushkuley, Ph.D., President, Commercial and Consulting, EVERSANA INTOUCH: Recession will cast a large, dark cloud on all aspects of our industry. It can have a significant effect on the affordability of pharmaceutical products for patients, put additional pressures on pharmaceutical companies from payers as well as choke influx of R&D financing for new medications. As costs of healthcare continue to rise, we’ll see a continued focus on long-term outcomes, real-world evidence and HEOR research to prove the value of new products. Payers and organized customers (hospital networks and IDNs) will continue to enforce strict treatment protocols often based on reducing costs and the use of generics. In this situation, branded products need to focus on an overarching value story going beyond clinical benefits of the products.  

Healthcare Agency Roundtable 2022: Positioning for resiliency: Back to the (virtual) office, building and retaining talent (Part I)

Healthcare Agency Roundtable 2022: Tech trends, opportunities, and woes (Part III)

Healthcare Agency Roundtable 2022: Diversity, equity, and inclusion: Putting words into action (Part IV)

Healthcare Agency Roundtable 2022: Moving into 2023 (Part V)

 

Maria Fontanazza

Maria Fontanazza is the director of content, Med Ad News and PharmaLive.com.

 

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A popular vacation destination is about to get much more expensive

The entry fee to this destination known for its fauna has been unchanged since 1998.

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When visiting certain islands and other remote parts of the world, travelers need to be prepared to pay more than just the plane ticket and accommodation costs.

Particularly for smaller places grappling with overtourism, local governments will often introduce "tourist taxes" to go toward things like reversing ecological degradation and keeping popular attractions clean and safe.

Related: A popular European city is introducing the highest 'tourist tax' yet

Located 900 kilometers off the coast of Ecuador and often associated with the many species of giant turtles who call it home, the Galápagos Islands are not easy to get to (visitors from the U.S. often pass through Quito and then get on a charter flight to the islands) but are often a dream destination for those interested in seeing rare animal species in an unspoiled environment.

The Galápagos Islands are home to many animal species that exist nowhere else in the world.

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This is how much you'll have to pay to visit the Galápagos Islands

While local authorities have been charging a $100 USD entry fee for all visitors to the islands since 1998, Ecuador's Ministry of Tourism announced that this number would rise to $200 for adults starting from August 1, 2024. 

More Travel:

According to the local tourism board, the increase has been prompted by the fact that record numbers of visitors since the pandemic have started taking a toll on the local environment. The islands are home to just 30,000 people but have been seeing nearly 300,000 visitors each year.

"It is our collective responsibility to protect and preserve this unparalleled ecosystem for future generations," Ecuador's Minister of Tourism Niels Olsen said in a statement. "The adjustment in the entry fee, the first in 26 years, is a necessary measure to ensure that tourism in the Galápagos remains sustainable and mutually beneficial to both the environment and our local communities."

These are the other countries which are raising (or adding) their tourist taxes

While the $200 applies to most international adult arrivals, there are some exceptions that can make one eligible for a lower rate. Adult citizens of the countries that make up the South American treaty bloc Mercosur will pay a $100 fee while children from any country will also get a discounted rate that is currently set at $50. Children under the age of two will continue to get free access.

In recent years, multiple countries and destinations have either raised or introduced new taxes for visitors. Thailand recently started charging all international visitors between 150 and 300 baht (up to $9 USD) that are put toward a sustainability budget while the Italian city of Venice is running a test in which it charges those coming into the city during the most popular summer weekends five euros.

Places such as Bali, the Maldives and New Zealand have been charging international arrivals a fee for years while Iceland's Prime Minister Katrín Jakobsdóttir hinted at plans to introduce something similar at the United Nations Climate Ambition Summit in 2023.

"Tourism has really grown exponentially in Iceland in the last decade and that obviously is not just creating effects on the climate," Jakobsdóttir told a Bloomberg reporter. "Most of our guests visit our unspoiled nature and obviously that creates a pressure."

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Merck’s six-year deal strategy could deliver a blockbuster if hypertension drug is OK’d this month

With an FDA decision expected next week for its blood pressure drug sotatercept, Merck is hoping that its bundle of acquisitions in recent years will lead…

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With an FDA decision expected next week for its blood pressure drug sotatercept, Merck is hoping that its bundle of acquisitions in recent years will lead to multiple approvals and late-stage clinical wins.

The regulator is set to decide whether to approve the pulmonary arterial hypertension drug known as sotatercept by March 26. If approved, the drug could generate $1.9 billion in sales in 2025, according to Leerink Partners analyst Daina Graybosch.

The subcutaneous treatment came to Merck by way of its $11.5 billion acquisition of Acceleron in 2021.

Sunil Patel

“We viewed [Acceleron] as a great Merck-type company to own, especially with their legacy of R&D,” Sunil Patel, Merck’s head of corporate development and business development & licensing, said in an interview.

For the past few years, the pharma giant has been amassing help from external biotechs to broaden its pipeline and prepare for the looming patent deadline for Keytruda, the cancer immunotherapy that had $25 billion in sales last year. It’s Merck’s most notable treatment to come from external innovation; Organon made the drug, known then as pembrolizumab, and was bought by Schering-Plough, which merged with Merck in 2009.

Now, Merck is once again hoping a drug that it bet billions of dollars on will lead a spate of approvals out of its promising late-stage pipeline. The company has put at least $50 billion toward business development since 2018. Aside from Covid-19 treatment Lagevrio, which was authorized in late 2021 and developed with Ridgeback Biotherapeutics, Merck’s dealmaking over the past few years has not produced another blockbuster medicine.

In three months, Merck could have another approval in patritumab deruxtecan, an antibody-drug conjugate it’s developing with Daiichi Sankyo, in certain forms of non-small cell lung cancer. The FDA set a decision date of June 26. As part of the $4 billion upfront deal, Merck is co-developing and co-commercializing three antibody-drug conjugates with the ADC powerhouse.

Merck also expects a late-stage race with Roche in the inflammatory market, stemming from its $10.8 billion acquisition of Prometheus Biosciences last year. It began a Phase III of Prometheus’ lead drug, now called tulisokibart or MK-7240, in ulcerative colitis last fall. Meanwhile, the company also bagged a Phase I/II cancer drug via its more relatively modest $680 million acquisition of Harpoon Therapeutics earlier this year.

The acquisitions are likely to keep coming. Merck CEO Rob Davis said earlier this year the pharma is willing to spend as much as $15 billion on M&A.

It’s made more than 20 biotech acquisitions in the past 10 years, and that has led to at least 17 compounds that have been approved or are in mid- and late-stage development, Patel said.

“This current management team is deeply rooted in the legacy of this company. They understand the importance of building a long-term sustainable future, and they’re just not afraid to make the bold scientific bets,” he said.

Last year, Merck adjusted the way it calculates R&D spending to factor in M&A and licensing costs, and doing so catapulted the company to the top of Endpoints News 2023 pharma R&D expenditure list.

But not all deals have been smooth. Merck discontinued a Covid-19 treatment candidate from its 2020 acquisition of OncoImmune. And a chronic cough drug that it gained through its 2016 acquisition of Afferent Pharmaceuticals has twice been rejected by the FDA. The drug has been approved in Europe, Switzerland and Japan.

All told, Merck inks about 80 to 100 business development transactions per year, Patel said. That includes licensing pacts and early-stage collaborations, like a $1 billion biobuck-loaded deal for new biologics with Pearl Bio that it announced last week.

“Once we get through the science, we act decisively and very rapidly to bring the right type of BD structure,” said Patel, who’s been at Merck Research Laboratories for 25 years.

Dean Li

About 80 employees search and evaluate potential transactions, which are then presented to a committee led by Dean Li, president of Merck Research Laboratories. Li joined Merck in 2017 from the University of Utah Health, where he co-founded biotechs such as Recursion and Hydra Biosciences.

“It’s seamless between Merck Research Labs and the BD unit. We’re just one simple group that operates with the one pipeline mentality,” Patel said.

About 60% of the Acceleron team remains at Merck.

“That’s a testament to how we can integrate these teams and how we embrace the science that we’re acquiring,” he said.

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Key Events This Week: Central Banks Galore Including A Historic Rate Hike By The BOJ

Key Events This Week: Central Banks Galore Including A Historic Rate Hike By The BOJ

According to DB’s Jim Reid, "this could be a landmark…

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Key Events This Week: Central Banks Galore Including A Historic Rate Hike By The BOJ

According to DB's Jim Reid, "this could be a landmark week in markets as the last global holdout on negative rates looks set to be removed as the BoJ likely hikes rates from -0.1% tomorrow." That will likely overshadow the FOMC that concludes on Wednesday that will have its own signalling intrigue given recent strong inflation. We also have the RBA meeting tomorrow and the SNB and BoE meetings on Thursday to close out a big week for global central bankers with many EM countries also deciding on policy. We’ll preview the main meetings in more depth below but outside of this we have the global flash PMIs on Thursday as well as inflation reports in Japan (Thursday) and the UK (Wednesday). US housing data also permeates through the week as you'll see in the full global day-by-day week ahead at the end as usual.

Let’s go into detail now, starting with the BoJ tomorrow. We’ve had negative base rates now for 8 years which if is the longest run ever seen for any country in the history of mankind. In fact it is doubtful that pre-historic man was as generous as to charge negative interest rates on lending money prior to this! It also might be one of the longest global runs without any interest rate hikes given the 17 year run that could end tomorrow. So, as Reid puts it, a landmark event.

DB's Chief Japan economist expects the central bank to revise its policy and abandon both NIRP and the multi-tiered current account structure and set rates on all excess reserves at 0.1%. He also sees both the yield curve control (YCC) and the inflation-overshooting commitment ending, replaced by a benchmark for the pace of the bank’s JGB purchasing activity. The house view forecast of 50bps of hikes through 2025 is more hawkish than the market but risks are still tilted to the upside. On Friday, the Japan Trade Union Confederation (Rengo) announced the first tally of the results of this year's shunto spring wage negotiation. The wage increase rate, including the seniority-based wage hike, is 5.28%, which was significantly higher than expected. This year will probably see the highest wage settlements since 1991 which given Japan’s recent history is an incredible turnaround. This wage data news has firmed up expectations for tomorrow.

With regards to the FOMC which concludes on Wednesday, DB economists expect only minor revisions to the meeting statement that saw an overhaul last meeting. With regards to the SEP, the growth and unemployment forecasts are unlikely to change but the 2024 inflation forecasts potentially could; elsewhere, expect the Fed to revise up their 2024 core PCE inflation forecast by a tenth to 2.5%, although they see meaningful risks that it gets revised up even higher to 2.6%. In our economists' view, a 2.5% core PCE reading would allow just enough wiggle room to keep the 2024 fed funds rate at 4.6% (75bps of cuts). However, if core PCE inflation were revised up to 2.6%, it would likely entail the Fed moving their base case back to 50bps of cuts, as this would essentially reflect the same forecasts as the September 2023 SEP.

Beyond 2024, DB expect officials to build in less policy easing due to a higher r-star. If two of the eight officials currently at 2.5% move up by 25bps, then the long-run median forecast would edge up to 2.6%. This could be justified by a one-tenth upgrade to the long-run growth forecast. After all this information is released the presser from Powell will of course be heavily scrutinised, especially on how Powell sees recent inflation data. Powell should also provide an update on discussions around QT but it is unlikely they are ready yet to release updated guidance.

One additional global highlight this week might be a big fall in UK inflation on Wednesday, suggesting that headline CPI will slow to 3.4% (vs 4% in January) and core to 4.5% (5.1%). Elsewhere there is plenty of ECB speaker appearances including President Lagarde on Wednesday. They are all highlighted in the day-by-day guide at the end.

Courtesy of DB, here is a day-by-day calendar of events

Monday March 18

  • Data: US March New York Fed services business activity, NAHB housing market index, China February retail sales, industrial production, property investment, Eurozone January trade balance, Canada February raw materials, industrial product price index, existing home sales

Tuesday March 19

  • Data: US January total net TIC flows, February housing starts, building permits, Japan January capacity utilization, Germany and Eurozone March Zew survey, Eurozone Q4 labour costs, Canada February CPI
  • Central banks: BoJ decision, ECB's Guindos speaks, RBA decision
  • Auctions: US 20-yr Bond ($13bn, reopening)

Wednesday March 20

  • Data: UK February CPI, PPI, RPI, January house price index, China 1-yr and 5-yr loan prime rates, Japan February trade balance, Italy January industrial production, Germany February PPI, Eurozone March consumer confidence, January construction output
  • Central banks: Fed's decision, ECB's Lagarde, Lane, De Cos, Schnabel, Nagel and Holzmann speak, BoC summary of deliberations
  • Earnings: Tencent, Micron

Thursday March 21

  • Data: US, UK, Japan, Germany, France and Eurozone March PMIs, US March Philadelphia Fed business outlook, February leading index, existing home sales, Q4 current account balance, initial jobless claims, UK February public finances, Japan February national CPI, Italy January current account balance, France March manufacturing confidence, February retail sales, ECB January current account, EU27 February new car registrations
  • Central banks: BoE decision, SNB decision
  • Earnings: Nike, FedEx, Lululemon, BMW, Enel
  • Auctions: US 10-yr TIPS ($16bn, reopening)
  • Other: European Union summit, through March 22

Friday March 22

  • Data: UK March GfK consumer confidence, February retail sales, Germany March Ifo survey, January import price index, Canada January retail sales

* * *

Finally, looking at just the US, Goldman notes that the key economic data releases this week are the Philadelphia Fed manufacturing index and existing home sales reports on Thursday. The March FOMC meeting is on Wednesday. The post-meeting statement will be released at 2:00 PM ET, followed by Chair Powell’s press conference at 2:30 PM. There are several speaking engagements from Fed officials this week, including Chair Powell, Vice Chair for Supervision Barr, and President Bostic.

Monday, March 18

  • There are no major economic data releases scheduled.

Tuesday, March 19

  • 08:30 AM Housing starts, February (GS +9.4%, consensus +7.4%, last -14.8%); Building permits, February (consensus +2.0%, last -0.3%)

Wednesday, March 20

  • 02:00 PM FOMC statement, March 19 – March 20 meeting: As discussed in our FOMC preview, we continue to expect the committee to target a first cut in June, but we now expect 3 cuts in 2024 in June, September, and December (vs. 4 previously) given the slightly higher inflation path. We continue to expect 4 cuts in 2025 and now expect 1 final cut in 2026 to an unchanged terminal rate forecast of 3.25-3.5%. The main risk to our expectation is that FOMC participants might be more concerned about the recent inflation data and less convinced that inflation will resume its earlier soft trend. In that case, they might bump up their 2024 core PCE inflation forecast to 2.5% and show a 2-cut median.

Thursday, March 21

  • 08:30 AM Current account balance, Q4 (consensus -$209.5bn, last -$200.3bn)
  • 08:30 AM Philadelphia Fed manufacturing index, March (GS 3.2, consensus -1.3, last 5.2): We estimate that the Philadelphia Fed manufacturing index fell 2pt to 3.2 in March. While the measure is elevated relative to other surveys, we expect a boost from the rebound in foreign manufacturing activity and the pickup in US production and freight activity.
  • 08:30 AM Initial jobless claims, week ended March 16 (GS 210k, consensus 215k, last 209k): Continuing jobless claims, week ended March 9 (consensus 1,815k, last 1,811k)
  • 09:45 AM S&P Global US manufacturing PMI, March preliminary (consensus 51.8, last 52.2): S&P Global US services PMI, March preliminary (consensus 52.0, last 52.3)
  • 10:00 AM Existing home sales, February (GS +1.2%, consensus -1.6%, last +3.1%)
  • 02:00 PM Federal Reserve Vice Chair for Supervision Barr speaks: Federal Reserve Vice Chair Michael for Supervision Barr will participate in a fireside chat in Ann Arbor, MI with students and faculty. A moderated Q&A is expected. On February 14, Barr said the Fed is “confident we are on a path to 2% inflation,” but the recent report showing prices rose faster than anticipated in January “is a reminder that the path back to 2% inflation may be a bumpy one.” Barr also noted that “we need to see continued good data before we can begin the process of reducing the federal funds rate.”

Friday, March 22

  • 09:00 AM Fed Reserve Chair Powell speaks: The Federal Reserve Board will host a Fed Listens event in Washington D.C. on “Transitioning to the Post-Pandemic Economy.” Chair Powell will deliver opening remarks. Vice Chair Phillip Jefferson and Fed Governor Michelle Bowman will moderate conversations with leaders from various organizations. On March 6, Chair Powell noted in his congressional testimony that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.
  • 12:00 PM Federal Reserve Vice Chair for Supervision Barr speaks: Federal Reserve Vice Chair for Supervision Michael Barr will participate in a virtual event on “International Economic and Monetary Design.” A moderated Q&A is expected.
  • 04:00 PM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Fed President Raphael Bostic will participate in a moderated conversation at the 2024 Household Finance Conference in Atlanta. On March 4, Bostic said, “I need to see more progress to feel fully confident that inflation is on a sure path to averaging 2% over time.” Bostic also noted, “I expect the first interest rate cut, which I have penciled in for the third quarter, will be followed by a pause in the following meeting.”

Source: DB, Goldman, BofA

Tyler Durden Mon, 03/18/2024 - 09:59

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