Novo’s Post-Ozempic Plan, Paramount Gets Closer to Warner Bros Merger

Zaid Admani (0:00)

Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Monday, September 21st. In today's episode, I'll break down why 5% treasury yield might actually be a good thing. I'll also tell you why Novo Nordis is trying to reinvent itself after falling behind Eli Lilly, and why Paramount might finally be getting closer to its massive merger with Warner Brothers. Then stick around to the end of the show to find out which stock has been the best performing of the last 25 years. And trust me, it's not who you think it is. We got a great show for you today.

Let's go.

Stocks are coming off a pretty wild week, but despite all the drama, the S&P 500 was basically flat on the week, while the NASDAQ managed to gain 0.7%. The Dow ended up down 1.7% for its third straight losing week, but nobody cares about the Dow, so. Last week, the big news was that the Federal Reserve raised interest rates for the first time in three years. And you know, for the most part, the stock market kind of shrugged it off. And that's because the stock market seems to be taking cues from the bond market right now. The bond market seems to be running the show. Lately, the days where bond yields go up, stocks go down, and the days where yields go down, stocks go up, like we saw last Thursday. And you know, that makes sense, right? Higher yields means higher borrowing costs for companies and consumers, which can slow economic growth. On top of that, when you can earn close to 5% on US treasuries, bonds suddenly look a lot more attractive for investors compared to taking risk in the stock market. But the big question now is what happens to yields from here and why are yields up in the first place? There's actually two explanations on why yields could be rising. There's the optimistic explanation, and then there's the bearish one. Just for some context, a 10-year treasury yield started the year around 4.17% and now it's hovering right around 5%. The optimistic explanation for why that happened is that the economy is just really strong right now. The Atlanta Fed is tracking economic growth at 5.1% for Q3. On top of that, S&P 500 earnings are expected to grow nearly 29% in Q3, and unemployment is still sitting around 4.1%. So maybe rates are higher simply because the economy can handle them. So that's the optimistic take on what's happening with the bond market. The bearish explanation is that investors are demanding more yield on bonds because they're worried about inflation and government debt and geopolitics and the credibility of US policy. Right now, the market is leaning towards the optimistic explanation, which is why stocks are still hovering near all time highs. I think the wild card in all of this is what happens with oil prices. Crude prices actually pulled back at the end of last week and continue to pull back at the start of this week, but there's now a new shortage of oil tankers around the Strait of Hormuz. So even if the price of a barrel of oil comes down, the cost to deliver that oil could stay high because of shipping costs, which could keep the price of gas and diesel high, which could lead to elevated inflation. So as we enter into Q4, the two major themes are what's going to happen with the bond market and what's going to happen to oil. I think those two things are going to continue to dominate the headlines, at least until we start earning season in a few weeks. So we'll continue to keep an eye on all that along with everything else happening. So definitely get subscribed to the podcast if you haven't already, especially with everything going on right now, and tune in every day to stay in the loop.

Let's run through some headlines, starting with Novo Nordisk. The Danish pharma giant Novo Nordisk held a big investors event this morning and basically laid out their plans for life after Ozempic and WeGovV. Remember Novo invented the modern weight loss drug market with Ozempic, but now the market is dominated by Eli Lilly with their Manjaro and Zep-Bound drugs. And you can see the impact of Novo Nordisk losing their grip on the weight loss market. Novo's stock has dropped 27% in the last 12 months, while Eli Lilly's stock has gone up over 50%. So the other problem for the company is their patents. Semi-glutide, which is the active ingredient in Ozempic and WeGovV starts losing patent protection in major markets over the next several years. In the US that patent will expire in 2032, which will allow generic versions of Ozempic to hit the market, and that's a big deal because the US accounted for more than half of Novo Nordis' sales last year. So Novo Nordis is now trying to build their next generation of drugs before the patents expire. In the investor's event, the company says they want to launch more than five new multi-blockbuster drugs by 2030 And they're not just focused on the weight loss and diabetes sector, they're also looking into areas like cardiovascular disease, liver disease and blood disorders. And in order to meet their goals, the company is planning to use AI to speed up the development process. Last week, Nova Nordisk announced a partnership with Anthropic to use Claude Science inside their R&D. Nova wants to use the AI to analyze research and solve scientific problems and ultimately speed up how quickly new drugs make it through development. So yeah, the company and its new CEO are talking a big game right now and trying to shore up investor confidence, but the market isn't buying it at all. In fact, Novo's stock dropped 7% this morning after the investor meeting. The thing is, Novo Nordis fumbled the weight loss opportunity with Ozepix so bad that investors are now hesitant to give the company any benefit of the doubt. So Novo can talk a big game all they want, but at this point, they're gonna have to prove to investors that they can still innovate before investors are ready to jump back in. And yeah, sure, using AI for drug development makes for a great headline, and I'm sure it's gonna help speed up drug discovery, but at this point, every pharma company on the planet will be using AI. So I'm not really sure how much of an edge using AI is at this point. Let me know in the comments on what you guys think. Are you still bullish on Nova Nordis? Do you think they'll make a comeback? I know that Nova Nordis has seen some early success with their WeGovV weight loss pill, but still, as of right now, all the hype and attention seems to be going towards Eli Lilly.