The Future is Bright For Today
Stock futures are higher with an S&P 500 (NYSEARCA:SPY) implied open 0.65% higher than yesterday’s close. It’s a big earnings day for the Dow (NYSEARCA:DIA), with 6 of the Big 30 having already reported earnings beats, among them the economic bellwether Caterpillar (NYSE:CAT), soft drink giant Coca Cola (NYSE:KO) and telecom behemoth Verizon (NYSE:VZ). The Dow continues to dance around its short-term downtrend line since topping in late January at 26,616. We are still 8% off those highs.
Biotech Taking A New Script from Express Scripts?
The largest manager of prescription drug benefits is sick and tired of rising drug prices, which never seem to fall no matter how sick and tired everyone is of rising drug prices. Express Scripts (NASDAQ:ESRX), whose stock has jumped nearly 1,000% since 2005 on the back of rising drug prices, no longer wants companies to set high list prices and then lower the costs through health plan rebates. What the replacement pricing model will be remains unknown. In any case, if prices are effectively lowered, however it is actually done, biotech stocks could soon see repercussions.
$74 For a Barrel of Oil? How Crude
Brent crude oil is at $74 a barrel while West Texas Intermediate is trading just above $68. The total collapse of Venezuela’s capacity to produce anything amid an economic freefall caused by a combination of hyperinflation and price controls has crimped supply in addition to ongoing OPEC cuts coming from Saudi Arabia. The possibility of renewed sanctions against Iran could further crimp supplies in the midst of rising interest rates and a renewed inflationary push. Watch out consumer prices.
Eurozone Zoning Out?
Business morale is falling in Germany, Italy, and France, according to the Ifo Institute, which asks 9,000 business leaders all from different firms how they feel about business and then pins a number on it. This contradicts a different agency that pins numbers on sentiment, the IHS Markit composite flash Purchasing Managers’ Index (PMI), which, taking a middle road, thinks that business confidence is steady. In construction however, both agencies agree that business confidence is at an all time high thanks to super low interest rates in Germany which are close to zero but finally rising somewhat.
GM Going Bankrupt in South Korea
General Motors (NYSE:GM) could be about to fold in South Korea. The American company was offered half a billion dollars from the South Korean government but reportedly fell short on a plan to stay sustainable in the country. Morgan Stanley believes GM will leave the country entirely and focus on the US and China. Another market heavily dependent on low borrowing costs for buyers, it’s hard to say what happens to GM if borrowing costs for new car buyers keep rising as they have been since 2016.