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Afternoon Note

Wait and See Mode

By Charles Payne, CEO & Principal Analyst
7/8/2019 1:57 PM

Stocks stand near session lows, as investors remain cautious before Fed Chair Jerome Powell appears before Congress later this week. To add some pressure, Morgan Stanley downgraded global stocks, as slowing GDP growth will offset central bank’s actions to ease monetary policy.

Beyond Meat (BYND) is higher today after Nestle’s CEO gave a positive comment on plant-based meat. “We’re talking about a pretty significant mega-trend,” the CEO said.

Health care is lower ahead of President Trump order on drug prices.  On July 5, President Trump said: “We’re gonna be announcing something very shortly – a favoured nation’s clause. As you know, for years and years, other nations paid less for drugs, sometimes by 60-70%. We’re going to be, and we’re working on it right now, we’re working on a favoured nation’s clause where we pay whatever the lowest nation’s price is.” The order is intending to set prices that Medicare pays according to an index of drug prices from around the world.

Sector Watch

S&P 500 Index

-0.56%

 

Communication Services (XLC)

-0.95%

 

Consumer Discretionary (XLY)

-0.01%

 

Consumer Staples (XLP)

+0.03%

 

Energy (XLE)

+0.36%

 

Financials (XLF)

-0.53%

 

Health Care (XLV)

-1.01%

 

Industrials (XLI)

-0.83%

 

Materials (XLB)

-0.48%

 

Real Estate (XLRE)

 

+0.32%

Technology (XLK)

-0.88%

 

Utilities (XLU)

 

-0.28%

 

I think market just is in wait and see mode without hits to Apple (AAPL) and Boeing (BA), the Dow would be unchanged.


Comments
i'm fed up with Trump tweeting about everything under the sun and trying to whip saw the markets by threatening the FEDs, Pharma, etc. He may have some good ideas but, is a lousy pitch man for collaboration and reasonable compromise that moves the needle in a positive way.

Gary Reynolds on 7/8/2019 3:24:15 PM
Forcing drug companies to accept a "favored nations" clause in their agreements to sell their products in the USA is going to be a tough pill for them to swallow. It'll hit their profit margins hard for a while, which may affect their investments in R&D for new drugs. However, that's probably the only way to get the issue of drug prices straightened out. Most other countries have negotiated agreements with these companies that removes the cost of R&D from the price, and possibly some marketing cost. That has put almost all of the burden for paying for R&D on American consumers, which is patently unfair. I imagine that the final result will probably spread the cost of R&D out among the "developed" nations on a fairly even basis, which means American consumers will still pay more for their drugs than consumers in 3rd world countries, but not more than consumers in countries like Canada, UK, France, Germany, etc. as is currently the case.

George Elliott on 7/8/2019 10:14:03 PM
 

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