📈 Novo's Power Move

Good morning.

⚡ The Fast Five → Honeywell hits all-time high on spin off talk, Ford gets a $9.63B loan, Supermicro stock falls after leaving Nasdaq 100, Trump and Softbank announce $100B US investment, Novo's $16.5B acquisition set to reshape pharma

🔎 Market Trends → Nasdaq closes at record as investors prepare for Fed rate decision; US Futures Hold Steady After Mixed Session

And now…

⏱️ Your 5-minute briefing for Tuesday, December 17, 2024:

MARKET BRIEF
Before the Open

Pre-Market

Fear & Greed

Markets in Review

Nasdaq Hits Record High as Fed Rate Cut Hopes Rise

The Nasdaq surged 1.2% to a record 20,173.9, while the S&P 500 climbed 0.4% to 6,074.1. The Dow slipped 0.3% to 43,717.5, dragged by weakness in energy stocks.

The Big Picture:

Markets rallied on Monday as investors bet on a second Fed rate cut this year, though caution lingers around inflation and economic resilience. The Federal Open Market Committee (FOMC) begins its two-day meeting Tuesday, with a 25-basis-point cut widely expected.

Meanwhile, private-sector output surged to its highest level since March 2022, driven by a booming services sector, even as manufacturing contracted. Oil slipped 1% to $70.57/barrel, reflecting supply confidence despite geopolitical risks.

With corporate earnings on deck from giants like Accenture (ACN), Nike (NKE), and Micron Technology (MU), investors are bracing for signals on growth and consumer demand.

Market Movers:

• Broadcom (AVGO): Jumped +11%, leading the S&P 500, after Goldman Sachs hiked its price target, citing AI-driven growth and expanding market share.

• Honeywell (HON): Gained +3.7%, topping the Dow, after announcing it may spin off its aerospace business to sharpen its portfolio and unlock value.

• Super Micro Computer (SMCI): Fell -8.3%, the S&P 500’s worst performer, as Nasdaq announced it will remove SMCI from the Nasdaq-100, triggering selling pressure.

• Ford (F): Declined -3.9% after Jefferies downgraded it to underperform, despite Ford securing a $9.6 billion government loan for battery plants.

What They’re Saying:

"The Fed’s balancing act continues—cutting rates while managing sticky inflation and a resilient economy. Investors see opportunities ahead, but volatility could follow any shift in tone," Saxo Bank said in a note.

WHAT WE’RE WATCHING
Events

• Today: Census Bureau - Retail Sales Ex Autos - 8:30am

• Why You Should Care: It's the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

• Today: Census Bureau - Advance Retail Sales - 8:30am

• Why You Should Care: It's the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

Earnings Reports

• Today: Heico, Worthington Enterprises

• Tomorrow: Birkenstock, General Mills, Micron Technology

MARKET BRIEF
Leading News

Novo's Power Move Could Reshape Pharma Manufacturing

Why it matters:

Novo Nordisk's $16.5 billion acquisition of Catalent's key manufacturing sites could end Wegovy shortages while sending ripples through the pharmaceutical industry's outsourcing model.

Zoom Out:

Pharma giants have leaned heavily on contract manufacturers like Catalent (CTLT) to produce critical drugs. Now, Novo Nordisk (NVO) has regulatory clearance to buy three of Catalent's specialized sites, bolstering its production capabilities for Wegovy and Ozempic – its blockbuster obesity and diabetes drugs.

• The deal ends a supply chain bottleneck that has slowed Wegovy's rollout and frustrated Novo's investors.

• But it raises uncomfortable questions for competitors like Eli Lilly (LLY), which now faces the paradox of relying on a manufacturer owned by its top rival.

Novo Holdings, which controls Novo Nordisk, will own the remainder of Catalent. This dual ownership structure tightens Novo's grip on pharma manufacturing, reshaping industry dynamics.

Deep Dive:

• Catalent's dominance: Catalent produces 1 in 28 global doses and contributed to over half of FDA-approved drugs in the past decade. Losing independence could tilt the balance of power.

• Boosted production: Novo gains direct control over facilities crucial for complex final-stage drug manufacturing – ensuring it meets soaring demand.

• Eli Lilly's dilemma: With competing drugs like Zepbound and Mounjaro, Lilly faces heightened pressure to expand its self-owned production footprint.

Market Pulse:

“It’s more the oddity of your main competitor also being your contract manufacturer…” – David Ricks, Eli Lilly CEO

Bull’s Take:

Novo's acquisition is a strategic masterstroke. Solving supply issues for Wegovy strengthens its position in the lucrative obesity market, while competitors scramble to catch up. For investors, Novo's expanding production edge makes NVO a long-term growth play in pharma’s most promising segment.

Keep an eye on Novo Nordisk (NVO). As it scales production, revenue growth could accelerate. Meanwhile, watch Eli Lilly's next moves – its ability to counter Novo’s edge will determine its future footing in this weight-loss war.

Headlines

• Honeywell stock hits all-time high as it weighs aerospace-unit sale (link)

• US finalizes $9.63 billion loan for Ford, SK On joint battery venture (link)

• Supermicro Stock Falls As Nasdaq 100 Dumps AI Data Center Specialist (link)

• Trump and SoftBank CEO announce the company will invest $100 billion in US projects (link)

• Why Broadcom Soared (Again) Today (link)

• Regional lenders Berkshire Hills Bancorp, Brookline strike $1.1 billion merger deal (link)

• MicroStrategy buys 15.3K Bitcoin for $1.5B, holdings reach 439K BTC (link)

CRYPTO
Fear & Greed

Headlines

• Bitcoin surpasses $107,000 to hit new high amid 'relentless' ETF demand (link)

• FTX customers to get distributions through Kraken and BitGo with bankruptcy plan set to be effective on Jan. 3 (link)

• SEC Approves Crypto Wallet Maker Exodus to List on NYSE American After Denying It in May (link)

DAILY SHARE
On the Socials