In brief (TL:DR)
- U.S. stocks were up sharply on Wednesday as a possibly schizophrenic U.S. President Donald Trump hinted he may yet be open to another stimulus package and the S&P 500 (+1.74%), tech-heavy Nasdaq Composite (+1.88%) and blue-chip Dow Jones Industrial Average (+1.91%) all marked sharp gains.
- Asian markets were all up, buoyed by the remote prospect of stimulus out of the United States
- U.S. 10-year Treasuries edged up to 0.784% as investors poured into stocks and other risk assets and bonds fell (bond prices normally fall as yields rise) on the prospect of further rounds of stimulus.
- The dollar was mostly flat, as investors adopted a wait-and-see approach to stimulus.
- Oil was mostly flat, with November contracts for WTI Crude Oil (Nymex) (-0.15%) at US$39.89 from US$39.95 as traders sat on the sidelines and with the dollar unchanged.
- Gold was mostly flat as well for December contracts with Gold (Comex) (-0.03%) at US$1,890.30 from US$1,890.80 in the previous session and with the dollar static.
- Bitcoin (+0.65%) rebounded to trade at US$10,650 (GMT 0200) as exchange outflows led inflows albeit at a slower pace from the day before (outflows suggest that traders are taking Bitcoin off the blocks in anticipation that price will rise).
In today’s issue…
- Trump Got Their Drugs, Investors Will Want Their Stocks
- Don’t Worry The U.S. Federal Reserve Hasn’t Abandoned You Yet
- DeFiant – The Decentralized Finance Party is Far From Over
1. Trump Got Their Drugs, Investors Will Want Their Stocks
- Cocktail of unapproved and experimental drugs that U.S. President Donald Trump has received for his coronavirus treatment will now be in hot demand despite not having completed clinical trials
- Trump has become a walking testimony for the efficacy of these drugs, despite not having run the full course, not knowing their contraindication and not fully understanding the implications of their method of administration or the drug cocktail itself
- Investors are betting on these stocks as the front runners for a coronavirus treatment, whereas an effective vaccine could be further down the road
Of the many experimental therapies that Trump has received, some have shown promise in early-stage patients but haven’t finished being tested.
As a precautionary measure, the President received Regeneron Pharmaceutical’s (+1.73%) antibody drug cocktail, which he is now hailing as a lifesaver, as well as Remdesivir, made by Gilead Sciences (+0.51%).
Regeneron’s antibody therapy is experimental, and Trump received it on compassionate-use grounds, which allows unapproved medicines to be used in patients with serious diseases who don’t have other treatment options.
Judging by his tweet storm, the drugs worked.
Better than a drug commercial, Trump has now become the walking, talking, tweeting, spokesperson for Regeneron.
The problem though is that Regeneron’s antibody cocktail isn’t available to a coronavirus sufferer if you’re not the President of the United States – because the drug hasn’t yet received approval from the U.S. Food and Drug Administration (FDA).
A class of monoclonal antibody treatments that have long been used to treat other infectious diseases Regeneron’s solution has also been pursued by the likes of Eli Lily (+3.35%) and GlaxoSmithKline (-0.60%) to treat the coronavirus and are in various stages of clinical testing.
But there’s no bigger endorsement of the efficacy of these drugs then the leader of the free world strutting his stuff and dramatically unmasking himself on the terrace of the White House.
And that could create challenges for the companies that produce the drugs that Trump is using.
Because Trump received so many experimental drugs at so early a stage in his coronavirus infection, it’s hard to say which drug helped him overcome the coronavirus, or indeed if any of them did.
One individual’s experience with a cocktail of therapies hardly forms the scientific basis with which to safely unleash them on the general population.
And we don’t know if Trump simply recovered of his own accord – but we do know that some of these experimental therapies were administered to the President as a matter of precaution.
Yet Trump’s apparent recovery (he’s hardly out of the woods yet, the disease can take anywhere between seven days and two weeks to manifest more serious life-threatening conditions), would certainly see Americans demanding that the drugs be approved and made available.
But there are plenty of unknown unknowns, which could potentially lead to the Trump administration strong arming the FDA to approve the therapies that worked on him, with scant data on the side effects of the interactions of the therapies used in concert.
The side effects of Regeneron are hardly known, because the sample size for the drug was very small, while those of Remdesivir and the steroid dexamethasone which Trump received as well, are more widely documented.
Regardless, Trump’s endorsement of these drug therapies will boost the stocks of these pharmaceutical companies, the science and safety of their products will just need to catch up with their stock prices.
2. Don’t Worry The U.S. Federal Reserve Hasn’t Abandoned You Yet
- Minutes of Federal Open Market Committee reveals that U.S. Federal Reserve’s muted response last month to any further quantitative easing or new measures was more a function of protocol than pandemic
- Fed must be seen to be giving politicians the opportunity to intervene in the economy before stepping in
- Meeting minutes helped to further fuel market sentiment
3. DeFiant – The Decentralized Finance Party is Far From Over
- DeFi yields and governance tokens may have taken a tumble but the value of transactions as well as the amount locked in smart contracts has continued to surge
- Decentralized exchange volume reflects a potentially sustainable turn away from centralized exchanges to decentralized exchanges as the financial services space within the cryptocurrency industry continues to evolve
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