Novavax led the gains among vaccine stocks through lunchtime, as a panel of US Food and Drug Administration advisers is expected to meet today and discuss the next formula for upcoming Covid-19 shots this autumn.
"On June 5, 2024, the Vaccines and Related Biological Products Advisory Committee (VRBPAC) will meet in open session to discuss and make recommendations on the selection of the 2024- 2025 Formula for COVID-19 vaccines," the FDA wrote in a briefing document.
The FDA's new vaccine formula is expected to target the JN.1 subvariant known as KP.2, which has become dominant in the US in recent months.
Novavax's vaccine targets JN.1, which aligns with European recommendations. The EU's regulator has told pharmaceutical companies to update their vaccines for that variant.
Vaccines based on messenger RNA (mRNA), like those from Moderna or Pfizer and partner BioNTech, are also waiting for the FDA to provide formula guidance.
In the latest earnings call, Novavax executives discussed their Covid-19 vaccine targeting JN.1 went into commercial development.
"If a strain other than JN.1 is selected this late in the development process, a protein-based option will not be available for the US population," Novavax said in a statement emailed to Reuters last month. Novavax is the only company making protein-based Covid vaccines in the US.
Shares of heavily shorted Novavax soared as much as 25% on Wednesday. Shares are up more than 400% since the end of April. Data from S3 Partners shows short interest topped 33% of the equity float.
Moderna rose by as much as 5.2%, with shares up 52% for the year. BioNTech gained up to 1.8%, while Pfizer slipped slightly.
At the risk of looking silly, I think the market is wrong about the odds of a Fed rate cut in July. Let’s discuss why.
Market odds courtesy of CME Fedwatch, annotations by Mish
The June Fed meeting is a week from now, June 12. The market view is a 99.7 percent chance of no change with a 0.3 percent chance of a hike.
10 Reasons Why a Rate Cut in July
In general, data is weakening across the board. Real disposable income has been negative in two of the last there months.
The BEA mage a large negative revision to GDP and GDI.
Consumer spending took a dive in April and I expect it will stick this time.
Terrible reports from Target and Walmart on discretionary consumer spending.
There have been numerous negative revisions in most of the recent hard data.
Job openings are plunging.
The GDPNow forecast is plunging fast.
I finally expect rent to break the string of 32 consecutive months of rising at least 0.4 percent.
The July meeting is nearly two months away, on July 31. There is plenty of time for further economic weakening and that is what I expect.
There is no meeting in August. If the Fed is at all concerned about slowing, but not wanting to risk being too late (not that it will matter, but that is how the Fed thinks), the Fed will find a reason for a July cut.
What Will It Take?
To cut rates, the Fed will need some combination of weak jobs, rising unemployment, and improving year-over-year inflation.
There are two chances for a poor jobs report. The Bloomberg Econoday forecast for May is 195,000 jobs. That report is in two days. The July jobs report is on Friday, July 5.
There are also two chances for improvement in the CPI.
The BLS will release the Consumer Price Index for May 2024 on Wednesday, June 12. There will be another chance for enough improvement to satisfy the Fed for the June report released mid-July.
Dramatically Weakening GDPNow Forecast
GDPNow forecast from the Atlanta Fed as of 2024-06-03. Chart by Mish
As I watch the evolution of consumer spending, housing starts, new home sales, and GDPNow trends, it appears the economy has peaked.
A rate cut is consistent with weakening data as long as there is further improvement in the year-over-year CPI and/or weakening jobs.
Finally, if the Fed is looking to cut rates before the election, there are only two chances, July and September. There are no Fed meetings in August or October.
Important note: This does not change my long-term inflation forecast. The Fed will struggle to keep inflation near 2.0 percent. I will do a follow-up on this idea.
New York Gov. Kathy Hochul is ditching the MTA congestion pricing plan indefinitely — with insiders saying she’s worried that it’s “not the right time” as New Yorkers face a cost-of-living crisis.
“Let’s be real a $15 charge .. puts the squeeze on the very people who make this city go,” Hochul said in a video announcement.
“I cannot add another burden to working middle class New Yorkers or create another obstacle to our continued economic recovery” from the COVID pandemic, she added.
Gov. Kathy Hochul is delaying the start of congestion pricing.REUTERS The Democrat, who is likely to run for reelection in two years, had faced mounting public pressure over the dreaded toll, which would have charged drivers entering Manhattan below 60th Street.
“I think the Post spotlighting the real concerns of working New Yorkers definitely impacted the conversation. It’s tone deaf to charge New Yorkers $3,600 every year when they can’t afford to put food on the table,” a source familiar with the governor’s thinking said.
Another source close to Hochul’s office added: “The governor is concerned about the economic recovery in Manhattan and the cost of living. New Yorkers are struggling. It’s not the right time to do it.”
The plan would charge motorists $15 to enter Manhattan below 60th Street.NY Post composite
City Council Minority Leader Joe Borelli also credited The Post’s extensive coverage of the much-maligned toll.
“But not for relentless and objective coverage from The Post and a few other outlets, this would have gone through, no questions asked,” Borelli (R-Staten Island) said.
A delay in the congestion pricing plan start date does not require legislative approval, but the state Senate and Assembly would have to approve legislation to make up for the subsequent revenue loss to the MTA.
Here's everything we know about the NYC congestion pricing plan
Major highways, including the FDR Drive and the West Side Highway, were to be exempt from the toll, but drivers would be charged if they exited onto a street in NYC’s central business district below 60th Street.
The rush-hour rates would be in place from 5 a.m. and 9 p.m. weekdays, according to reports. During non-peak hours, the toll would be about $3.75 for a car. On weekends, the full rate would be charged between 9 a.m. and 9 p.m.
Hochul said she would work with state and city lawmakers in the coming months on how to achieve the “objectives” of the congestion pricing plan without adding a burden on commuters.
Congestion pricing — which was pitched as a way to reduce city traffic, raise money for public transit and improve air quality — has been slammed by both parties as a “cash grab” that will drain even locals who don’t own cars.
It was not immediately clear how the indefinite delay would impact the MTA’s $507 million infrastructure deal with TransCore, which had already installed license plate cameras to enforce the new pricing.
The delay was met with cheers from some of the toll’s biggest critics on both sides of the aisle.
“It is welcome news that Governor Hochul is considering delaying congestion pricing, scheduled to begin June 30, due to our pressure, the public‘s outcry and concerns it will impact Democrats in November’s election,” Rep. Nicole Malliotakis (R-NY) told The Post Wednesday morning.
“I urge my fellow New Yorkers to continue calling their city, state and federal representatives because it is working. They are feeling the heat and this war-on-cars cash grab must be reversed!” she insisted.
Rep. Josh Gottheimer (D-NJ) also celebrated the impending announcement.
“I want to thank Gov. Hochul, Gov. [Phil] Murphy, Fort Lee Mayor [Mark] Sokolich, all involved elected officials, and especially the tireless advocates who focused on the key facts: The Congestion Tax would have caused more traffic and cancer-causing pollution for families in northern Jersey and the outer boroughs,” he added.
The plan has been criticized by Democrats and Republicans.Helayne Seidman
Borelli added that “nothing has changed since 2019 but politics.”
“It’s only the politics, though perhaps enhanced by the arrogance of the MTA’s leadership and the finger-in-the-wind flip-flopping of congestion pricing’s original gangster, Andrew Cuomo,” he said.
The congestion pricing plan was passed into law five years ago by Cuomo.
It’s unpopularity was not lost on Hochul, with a source close to the governor noting a recent Siena College poll that indicated most Democrats – even Manhattan liberals – opposed the plan.
MTA board member David Mack said he was “pleased” with Hochul’s decision.
“I have always maintained that this is absolutely the wrong time to impose an additional tax on a region still recovering from the aftermath of the pandemic,” Mack noted.
“As to whether this decision was politically motivated, I simply say that if, at the end of the day, the correct decision is made and it is based on the political will of the people, then the political system has actually worked,” he shrugged.
International Transport Workers Workers president John Samuelsen, who also serves on the MTA board, suggested that the governor’s decision is a case of “I told you so.”
“I told the governor two years ago that if she imposed the congestion toll without increases in transit service, it would be a political disaster,” Samuelson scoffed.
New York City Mayor Eric Adams said at a Wednesday morning press conference that he supported Hochul’s decision to delay the toll, adding that congestion pricing “should not be an undue burden on everyday New Yorkers.”
Hochul’s waffling, however, came as a surprise to key Democratic lawmakers.
“Senate Dems have not been briefed or given a bill,” said Sen. Liz Krueger (D-Manhattan), who chairs the finance committee.
State Sen. Peter Harckam and Assemblywoman Deb Glick said they also were not given a heads up about Hochul’s decision.
“I don’t really use terms like victory, but if this thing does get canceled, it’s the government responding to something that they did wrong,” Republican state Sen. Rob Rolison chimed in.
“It’s a tax and people should be screaming about it like we all are and I would say to the governor, respectfully, don’t delay it, just cancel it,” he suggested.
The idea to push back the toll was supposedly planted by Rep. Hakeem Jeffries (D-NY), who is aiming to win back the Democratic majority this year, a source told Politico, which reported Hochul was considering pushing back the plan Tuesday night.
But Hochul’s plan was met with hostility from mass transit advocates — some of whom said the governor needed to “stiffen [her] resolve.”
“New York City public transit riders gave Governor Hochul her margin of victory in the 2022 election. Stopping congestion pricing before it even starts would be an outrageous betrayal of our trust,” Rider Alliance executive director Betsy Plum said.
“Congestion pricing is the only public policy that can make our subway more reliable and accessible, speed up slow bus service, and help clear the air as wildfire smoke thickens. Governor Hochul must turn it on June 30 as planned,” Plum insisted.
A U.S. appeals court rejected a Securities and Exchange Commission rule intended to give investors more transparency into private funds, but which the nearly $27 trillion industry said threatened to fundamentally change how it does business.
The New Orleans-based 5th U.S. Circuit Court of Appeals decided that the SEC exceeded its authority by adopting the rule in August 2023. It ruled in favor of six private equity and hedge fund groups that challenged the regulations.
A request for comment to the SEC was not immediately returned.
Wednesday's decision is a victory for U.S. financial services companies and trade groups that have gone to court increasingly often to challenge rules they have argued would boost compliance costs and reduce profits.
Recent fights involving the SEC concerned regulations requiring more transparency surrounding short positions, and that firms that routinely deal in government bonds and other securities register as broker-dealers.
The latest decision addressed rules covering private equity funds, hedge funds, venture capital funds and managers of funds for institutional investors such as pension funds and endowments, among others.
These rules required fund managers to issue quarterly performance and fee reports, perform annual audits, and stop giving some investors preferential treatment over redemptions and preferential information about portfolio holdings.
They were intended to increase transparency, fairness and accountability in an industry known for opacity.
Industry critics said this lack of transparency has hurt ordinary investors with indirect exposure to private funds, such as through pension and retirement plans.
The SEC voted 3-2 to adopt the rules, with Democratic-appointed commissioners in favor and Republican-appointed commissioners opposed.
BIG COSTS CITED
Groups that sued to challenge the rules are the National Association of Private Fund Managers, the Alternative Investment Management Association, the American Investment Council, the Loan Syndications and Trading Association, the Managed Funds Association and the National Venture Capital Association.
They said the rules were "unduly burdensome," and would harm investors by forcing them to sift through "mountains" of new information to find what they want, while footing the estimated compliance costs of nearly $500 million a year.
The groups also said the rules could suppress capital formation, and make it harder for smaller advisers to compete.
Private funds often attract well-heeled, sophisticated investors, and as a result have received less federal regulatory oversight than investments geared toward ordinary investors.
The funds' assets under management swelled to $26.6 trillion in 2022 from $9.8 trillion in 2022, as the number of private funds more than tripled to about 101,000, according to the SEC.
In announcing the new rules, SEC Chair Gary Gensler said they would benefit "all investors, big or small, institutional or retail, sophisticated or not."
BlackRock Inc., Citadel Securities and other investors are backing an upstart Texas stock market, laying down a challenge to the New York Stock Exchange and Nasdaq Inc. and signaling a potential boost for a state trying to grab more of the financial services industry.
The Texas Stock Exchange has raised $120 million and plans to file registration documents with the US Securities and Exchange Commission, according to a LinkedIn post by James Lee, the exchange’s chief executive officer.
The Texas bourse will try to entice companies seeking relief from rising compliance costs at the NYSE and Nasdaq, Lee told the Wall Street Journal, which earlier reported the development. While entirely electronic, Lee said the TXSE will be headquartered in Dallas, bolstering a metro area that has been gaining financial jobs from the likes of Goldman Sachs Group Inc. and Charles Schwab Corp.
“The Texas Stock Exchange will focus on enabling US and global companies to access US equity capital markets and will provide a venue to trade and list public companies and the growing universe of exchange-traded products,” the TXSE said in a statement.
The exchange aims to handle its first trades in 2025 and host its first listing in 2026, Lee told the Journal. A spokesperson for Ken Griffin’s Citadel confirmed the company is an investor in the project. BlackRock said the project would “increase liquidity and improve market efficiency” for its clients and other investors.
Established Players
The Texas venture is trying to muscle in on a business that consists of about 16 equities exchanges with widely varying trading volumes. NYSE exchanges accounted for more than 20% of the volume in US equities trading in May, with Nasdaq representing over 15%, according to data compiled by Bloomberg.
The listing of companies looking to tap the public market is also highly competitive. To entice corporations to choose their venues for initial public offerings, exchanges typically offer sweeteners like marketing on billboards in Times Square and ringing the opening bell on the floor. Once a company is listed, it generates steady income for the exchange as long as it doesn’t leave for a rival venue.
The TXSE is hardly the first initiative in which a group of market participants has backed a new exchange operator in hopes of disrupting the incumbents. Earlier this year, banks and market makers including Citadel Securities got behind Howard Lutnick’s new futures exchange, FMX, which is slated to launch in September.
Another exchange, MEMX, was founded in 2019 as a protest by banks and market makers against the rising data and connectivity fees charged by US stock markets. Its exchange accounted for 2.4% of US equities volumes in May, making it the sixth-largest in the country, data shows.
Backers of that platform, which also added an options exchange, include a suite of legacy financial institutions such as Goldman and JPMorgan Chase & Co., as well as market makers Citadel Securities and Virtu Financial Inc.
IEX, the firm made famous by Flash Boys, Michael Lewis’s book about high-frequency trading, touts itself as a champion for market integrity and fairness in pricing for participants. It represented about 1.8% of average daily US equities-trading volume in May. Similarly, Miami International Holdings Inc., or MIAX, accounted for only 1.7%.
Texas Growth
Texas has been increasingly luring corporations and financial firms by offering lower taxes and a more relaxed regulatory environment than blue states such as New York and California.
Goldman is building a new regional campus in Dallas with room for more than 5,000 employees, while JPMorgan’s Texas workforce has surpassed 30,000 in recent years as its New York total has slipped to less than 29,000.
The state is also developing a business-court system with an eye to handling more of the complex corporate litigation that Delaware is known for.
Elon Musk’s Tesla Inc. is asking shareholders at this month’s annual meeting to support a proposal to move the company’s articles of incorporation to Texas from Delaware. Earlier this year, Musk said that SpaceX, his rocket maker, was already moving its incorporation to Texas.
