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Week Ahead – Sino-US Tech War Heats Up

Week Ahead – Sino-US Tech War Heats Up

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Key Economic Events

Monday 10th August

UK Time Country Relevance Indicator Name Period
02:30 China (Mainland) High PPI YY Jul
02:30 China (Mainland) High CPI YY Jul
03:00 China (Mainland) High Total Social Financing Jul
07:00 Norway High Consumer Price Index MM Jul
07:00 Norway High Consumer Price Index YY Jul
07:00 Denmark High CPI YY Jul

Tuesday 11th August

00:50 Japan High Current Account NSA JPY Jun
01:00 Singapore High GDP Final YY Q2
09:30 United Kingdom High Claimant Count Unem Chng Jul
09:30 United Kingdom High ILO Unemployment Rate Jun
10:00 Germany High ZEW Economic Sentiment Aug
10:00 Germany High ZEW Current Conditions Aug
13:00 India High Industrial Output YY Jun
13:15 Canada High House Starts, Annualized Jul
Russia High GDP YY Quarterly Prelim Q2

Wednesday 12th August 

02:30 Australia High Wage Price Index QQ Q2
02:30 Australia High Wage Price Index YY Q2
03:00 New Zealand High Cash Rate 12 Aug
07:00 United Kingdom High GDP Est 3M/3M Jun
07:00 United Kingdom High GDP Estimate MM Jun
07:00 United Kingdom High GDP Estimate YY Jun
07:00 United Kingdom High Manufacturing Output MM Jun
07:00 United Kingdom High GDP Prelim QQ Q2
07:00 United Kingdom High GDP Prelim YY Q2
08:30 Sweden High CPI MM Jul
08:30 Sweden High CPI YY Jul
10:00 Italy High CPI (EU Norm) Final MM Jul
10:00 Italy High CPI (EU Norm) Final YY Jul
13:30 United States High CPI MM, SA Jul

Thursday 13th August

00:50 Japan High Corp Goods Price MM Jul
00:50 Japan High Corp Goods Price YY Jul
01:30 Australia High Employment Jul
01:30 Australia High Unemployment Rate Jul
07:00 Germany High HICP Final YY Jul
08:00 Czech Republic High CPI YY Jul
13:30 United States High Initial Jobless Clm 3 Aug, w/e
19:00 Mexico High Interest Rate Aug

Friday 14th August

03:00 China (Mainland) High Urban Investment (YTD)YY Jul
03:00 China (Mainland) High Industrial Output YY Jul
03:00 China (Mainland) High Retail Sales YY Jul
07:30 India High WPI Inflation YY Jul
07:45 France High CPI (EU Norm) Final MM Jul
07:45 France High CPI (EU Norm) Final YY Jul
08:00 Turkey High Current Account Balance Jun
10:00 Euro Zone High GDP Flash Estimate QQ Q2
10:00 Euro Zone High GDP Flash Estimate YY Q2
13:30 United States High Retail Sales MM Jul
14:15 United States High Industrial Production MM Jul
15:00 United States High U Mich Sentiment Prelim Aug

Country

US

Further evidence could show that coronavirus is getting under control in the US.  New cases and hospitalizations have been declining, however testing slowed down drastically in the east coast due to Hurricane Isaias.  On Wednesday, inflation data is expected to come back down to earth.  Headline inflation should drop from 0.6% to 0.3%, erasing much of last month’s biggest gain in eight years.  Core inflation is expected to remain steady 0.2%. The US economy should still expect depressed price levels until the country has the virus under control.  

The main event of the week is US retail sales, which could show the American shopper remains strong despite so many issues in the economy.  Retail sales has steadily increased over the past two months and that should continue albeit at a slower pace.  The July advance retail sales monthly reading is expected to increase 1.7%, which would be down from the 7.5% seen in June and the 18.2% rise in May.  

US Politics

Lawmakers have botched the latest COVID-19 relief bill and it seems President Trump might need to use his executive powers to provide some immediate aid.

Former-VP Biden will make his decision on his running mate.  Biden has signaled four African American women and Senator Elizabeth Warren are under consideration as his running mate.  Biden will turn 78 a few weeks after the election, so his VP selection will be critical for many voters.  

Mexico 

Mexico’s central bank should deliver a rate cut despite a temporary pickup with inflation.  The Banxico still has room for a few more rate cuts before the year is over and right now the economy needs it.  Mexico is still battling the coronavirus and fears are high the number of cases and the death toll are undercounted. Mexico’s economy is slowing recovering and easing lockdown measures is nowhere near being justified.  

EU

Much like everywhere else, the EU is seeing some surges in Covid cases but broadly speaking the second waves have been fairly limited. Not enough to stop the UK adding Belgium, among others to their quarantine list which also includes Spain, much to Madrid’s annoyance. The PMIs this week were encouraging, particularly on the manufacturing side. Next week is looking a little light on the data side.

UK

The UK will see next week just how hard a hit the economy took in the second quarter, with the average forecast coming in around a 20% contraction, much more severe than many of its peers. On a more positive note, the Bank of England sees the UK bouncing back faster that it previously anticipated, with the economy shrinking only 9.5% this year compared with 14% previously. Unemployment is also expected to stabilize around 7.5% which is far below what was previously the consensus forecast. The downside here is that the rebound after this year is expected to be weaker so a mixed news week for the UK.

Turkey

The lira fell around 7% in a few days against the dollar before paring losses on Friday. Turkey has long had a variety of problems that make investors nervous and they have very much come to the fore, culminating in soaring borrowing costs earlier this week. The lira has fallen to a record low and is now looking very vulnerable. This is a currency that has already had restrictions imposed in recent months and a country that has been burning through reserves to support it. With the central bank reluctant to hike rates and a leader that believes doing so stokes inflation – contrary to popular belief – and a record for sacking central bank heads that disagree, it’s hard to see where the country turns next to step further declines. 

China

Geopolitics will be the centre of attention with the US banning US companies from dealing with ByteDance and Tencent. Proposing banning Chinese listing in US for non-compliance with US accounting standards. The extent of China retaliation could adversely impact equity markets internationally and the CNY/CNH.

Industrial Production next Friday week’s data highlight.

Hong Kong

Covid-19 spread increases restrictions in Hong Kong. Hong Kong CEO postpones election one year due to Covid-19. Hong Kong equities lower, especially Tencent, after US bans today. Weekend retaliation from China could see Asian stock sold heavily on Monday.

India

Covid-19 cases continue skyrocketing. India is now in top four for infections. INR remains under pressure as stress on the government budget and banking sector continue. A weaker US Dollar appears merely a stay of execution.  Very real possibility that India will repeat Indonesia’s recent playbook, and get the central bank to directly purchase new government bond issues. Negative for currency and stocks.

Highest risk economy in Asia from an economic and Covid-19 perspective.

Australia

Australian Dollar grinds higher but momentum slows as domestic issues weigh heavily.

Restrictions increased in Melbourne as Covid-19 cases jumped to 700+ a day. Borders closed with NSW and Queensland. Community infections increase in Sydney. The return of movement restrictions in Sydney a potential negative game-changer.

RBA rate unchanged but uber-dovish guidance. AUD has not rallied high enough to bring comments yet. No market moving data this week.

Japan

USD/JPYhas recovery reduces selling pressure on Japan equities. Strong retaliation by China against US companies will see Japan equities under pressure from Tuesday, as Monday is a holiday.

Covid-19 cases continue spiking higher in Tokyo. Local government is close to finally declaring a state of emergency. Negative for Japan equities and Yen.

No significant data.

Markets

Oil

Oil’s midweek breakout was no gamechanger but it continues to trade towards the upper end of its two month range. The rally carried little momentum, further suggesting we’re at the latter end of an exhausted move but that, in itself, doesn’t mean we’re going to see a broad correction. It may just mean traders aren’t ready to jump fully back on the crude train yet, with Covid setbacks happening every week around the globe, the outlook remains uncertain. There’s a long and bumpy road ahead for the global recovery, we’ll have to learn to be extremely patient.

Gold

Gold could be the one to watch today as efforts to determine its risk role continue. Today we’re seeing some risk aversion ahead of the jobs report and the dollar is once again being favoured, seeing gold pulling off its highs. As it stands, it’s still looking pretty healthy though and it may take a pretty horrible report to test $2,000 again. It’s come a long way. 

There are a growing list of risk factors in these markets which should keep things interesting for weeks to come. US Covid cases and deaths are showing slight improvements this week, albeit from high levels, but we’ll need a lot more improving data to calm the nerves. Geopolitics isn’t improving any time soon so gold will remain volatile.

 

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Glimpse Of Sanity: Dartmouth Returns Standardized Testing For Admission After Failed Experiment

Glimpse Of Sanity: Dartmouth Returns Standardized Testing For Admission After Failed Experiment

In response to the virus pandemic and nationwide…

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Glimpse Of Sanity: Dartmouth Returns Standardized Testing For Admission After Failed Experiment

In response to the virus pandemic and nationwide Black Lives Matter riots in the summer of 2020, some elite colleges and universities shredded testing requirements for admission. Several years later, the test-optional admission has yet to produce the promising results for racial and class-based equity that many woke academic institutions wished.

The failure of test-optional admission policies has forced Dartmouth College to reinstate standardized test scores for admission starting next year. This should never have been eliminated, as merit will always prevail. 

"Nearly four years later, having studied the role of testing in our admissions process as well as its value as a predictor of student success at Dartmouth, we are removing the extended pause and reactivating the standardized testing requirement for undergraduate admission, effective with the Class of 2029," Dartmouth wrote in a press release Monday morning. 

"For Dartmouth, the evidence supporting our reactivation of a required testing policy is clear. Our bottom line is simple: we believe a standardized testing requirement will improve—not detract from—our ability to bring the most promising and diverse students to our campus," the elite college said. 

Who would've thought eliminating standardized tests for admission because a fringe minority said they were instruments of racism and a biased system was ever a good idea? 

Also, it doesn't take a rocket scientist to figure this out. More from Dartmouth, who commissioned the research: 

They also found that test scores represent an especially valuable tool to identify high-achieving applicants from low and middle-income backgrounds; who are first-generation college-bound; as well as students from urban and rural backgrounds.

All the colleges and universities that quickly adopted test-optional admissions in 2020 experienced a surge in applications. Perhaps the push for test-optional was under the guise of woke equality but was nothing more than protecting the bottom line for these institutions. 

A glimpse of sanity returns to woke schools: Admit qualified kids. Next up is corporate America and all tiers of the US government. 

Tyler Durden Mon, 02/05/2024 - 17:20

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Four burning questions about the future of the $16.5B Novo-Catalent deal

To build or to buy? That’s a classic question for pharma boardrooms, and Novo Nordisk is going with both.
Beyond spending billions of dollars to expand…

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To build or to buy? That’s a classic question for pharma boardrooms, and Novo Nordisk is going with both.

Beyond spending billions of dollars to expand its own production capacity for its weight loss drugs, the Danish drugmaker said Monday it will pay $11 billion to acquire three manufacturing plants from Catalent. It’s part of a broader $16.5 billion deal with Novo Holdings, the investment arm of the pharma’s parent group, which agreed to acquire the contract manufacturer and take it private.

It’s a big deal for all parties, with potential ripple effects across the biotech ecosystem. Here’s a look at some of the most pressing questions to watch after Monday’s announcement.

Why did Novo do this?

Novo Holdings isn’t the most obvious buyer for Catalent, particularly after last year’s on-and-off M&A interest from the serial acquirer Danaher. But the deal could benefit both Novo Holdings and Novo Nordisk.

Novo Nordisk’s biggest challenge has been simply making enough of the weight loss drug Wegovy and diabetes therapy Ozempic. On last week’s earnings call, Novo Nordisk CEO Lars Fruergaard Jørgensen said the company isn’t constrained by capital in its efforts to boost manufacturing. Rather, the main challenge is the limited amount of capabilities out there, he said.

“Most pharmaceutical companies in the world would be shopping among the same manufacturers,” he said. “There’s not an unlimited amount of machinery and people to build it.”

While Novo was already one of Catalent’s major customers, the manufacturer has been hamstrung by its own balance sheet. With roughly $5 billion in debt on its books, it’s had to juggle paying down debt with sufficiently investing in its facilities. That’s been particularly challenging in keeping pace with soaring demand for GLP-1 drugs.

Novo, on the other hand, has the balance sheet to funnel as much money as needed into the plants in Italy, Belgium, and Indiana. It’s also struggled to make enough of its popular GLP-1 drugs to meet their soaring demand, with documented shortages of both Ozempic and Wegovy.

The impact won’t be immediate. The parties expect the deal to close near the end of 2024. Novo Nordisk said it expects the three new sites to “gradually increase Novo Nordisk’s filling capacity from 2026 and onwards.”

As for the rest of Catalent — nearly 50 other sites employing thousands of workers — Novo Holdings will take control. The group previously acquired Altasciences in 2021 and Ritedose in 2022, so the Catalent deal builds on a core investing interest in biopharma services, Novo Holdings CEO Kasim Kutay told Endpoints News.

Kasim Kutay

When asked about possible site closures or layoffs, Kutay said the team hasn’t thought about that.

“That’s not our track record. Our track record is to invest in quality businesses and help them grow,” he said. “There’s always stuff to do with any asset you own, but we haven’t bought this company to do some of the stuff you’re talking about.”

What does it mean for Catalent’s customers? 

Until the deal closes, Catalent will operate as a standalone business. After it closes, Novo Nordisk said it will honor its customer obligations at the three sites, a spokesperson said. But they didn’t answer a question about what happens when those contracts expire.

The wrinkle is the long-term future of the three plants that Novo Nordisk is paying for. Those sites don’t exclusively pump out Wegovy, but that could be the logical long-term aim for the Danish drugmaker.

The ideal scenario is that pricing and timelines remain the same for customers, said Nicole Paulk, CEO of the gene therapy startup Siren Biotechnology.

Nicole Paulk

“The name of the group that you’re going to send your check to is now going to be Novo Holdings instead of Catalent, but otherwise everything remains the same,” Paulk told Endpoints. “That’s the best-case scenario.”

In a worst case, Paulk said she feared the new owners could wind up closing sites or laying off Catalent groups. That could create some uncertainty for customers looking for a long-term manufacturing partner.

Are shareholders and regulators happy? 

The pandemic was a wild ride for Catalent’s stock, with shares surging from about $40 to $140 and then crashing back to earth. The $63.50 share price for the takeover is a happy ending depending on the investor.

On that point, the investing giant Elliott Investment Management is satisfied. Marc Steinberg, a partner at Elliott, called the agreement “an outstanding outcome” that “clearly maximizes value for Catalent stockholders” in a statement.

Elliott helped kick off a strategic review last August that culminated in the sale agreement. Compared to Catalent’s stock price before that review started, the deal pays a nearly 40% premium.

Alessandro Maselli

But this is hardly a victory lap for CEO Alessandro Maselli, who took over in July 2022 when Catalent’s stock price was north of $100. Novo’s takeover is a tacit acknowledgment that Maselli could never fully right the ship, as operational problems plagued the company throughout 2023 while it was limited by its debt.

Additional regulatory filings in the next few weeks could give insight into just how competitive the sale process was. William Blair analysts said they don’t expect a competing bidder “given the organic investments already being pursued at other leading CDMOs and the breadth and scale of Catalent’s operations.”

The Blair analysts also noted the companies likely “expect to spend some time educating relevant government agencies” about the deal, given the lengthy closing timeline. Given Novo Nordisk’s ascent — it’s now one of Europe’s most valuable companies — paired with the limited number of large contract manufacturers, antitrust regulators could be interested in taking a close look.

Are Catalent’s problems finally a thing of the past?

Catalent ran into a mix of financial and operational problems over the past year that played no small part in attracting the interest of an activist like Elliott.

Now with a deal in place, how quickly can Novo rectify those problems? Some of the challenges were driven by the demands of being a publicly traded company, like failing to meet investors’ revenue expectations or even filing earnings reports on time.

But Catalent also struggled with its business at times, with a range of manufacturing delays, inspection reports and occasionally writing down acquisitions that didn’t pan out. Novo’s deep pockets will go a long way to a turnaround, but only the future will tell if all these issues are fixed.

Kutay said his team is excited by the opportunity and was satisfied with the due diligence it did on the company.

“We believe we’re buying a strong company with a good management team and good prospects,” Kutay said. “If that wasn’t the case, I don’t think we’d be here.”

Amber Tong and Reynald Castañeda contributed reporting.

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Petrina Kamya, Ph.D., Head of AI Platforms at Insilico Medicine, presents at BIO CEO & Investor Conference

Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb….

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Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb. 26-27 at the New York Marriott Marquis in New York City. Dr. Kamya will speak as part of the panel “AI within Biopharma: Separating Value from Hype,” on Feb. 27, 1pm ET along with Michael Nally, CEO of Generate: Biomedicines and Liz Schwarzbach, PhD, CBO of BigHat Biosciences.

Credit: Insilico Medicine

Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb. 26-27 at the New York Marriott Marquis in New York City. Dr. Kamya will speak as part of the panel “AI within Biopharma: Separating Value from Hype,” on Feb. 27, 1pm ET along with Michael Nally, CEO of Generate: Biomedicines and Liz Schwarzbach, PhD, CBO of BigHat Biosciences.

The session will look at how the latest artificial intelligence (AI) tools – including generative AI and large language models – are currently being used to advance the discovery and design of new drugs, and which technologies are still in development. 

The BIO CEO & Investor Conference brings together over 1,000 attendees and more than 700 companies across industry and institutional investment to discuss the future investment landscape of biotechnology. Sessions focus on topics such as therapeutic advancements, market outlook, and policy priorities.

Insilico Medicine is a leading, clinical stage AI-driven drug discovery company that has raised over $400m in investments since it was founded in 2014. Dr. Kamya leads the development of the Company’s end-to-end generative AI platform, Pharma.AI from Insilico’s AI R&D Center in Montreal. Using modern machine learning techniques in the context of chemistry and biology, the platform has driven the discovery and design of 30+ new therapies, with five in clinical stages – for cancer, fibrosis, inflammatory bowel disease (IBD), and COVID-19. The Company’s lead drug, for the chronic, rare lung condition idiopathic pulmonary fibrosis, is the first AI-designed drug for an AI-discovered target to reach Phase II clinical trials with patients. Nine of the top 20 pharmaceutical companies have used Insilico’s AI platform to advance their programs, and the Company has a number of major strategic licensing deals around its AI-designed therapeutic assets, including with Sanofi, Exelixis and Menarini. 

 

About Insilico Medicine

Insilico Medicine, a global clinical stage biotechnology company powered by generative AI, is connecting biology, chemistry, and clinical trials analysis using next-generation AI systems. The company has developed AI platforms that utilize deep generative models, reinforcement learning, transformers, and other modern machine learning techniques for novel target discovery and the generation of novel molecular structures with desired properties. Insilico Medicine is developing breakthrough solutions to discover and develop innovative drugs for cancer, fibrosis, immunity, central nervous system diseases, infectious diseases, autoimmune diseases, and aging-related diseases. www.insilico.com 


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