Morning Briefing
Slightly lower ahead of Fed Chair Powell's highly-anticipated address | ||||||
The S&P 500 futures trade four points, or 0.1%, below fair value ahead of Fed Chair Powell's speech on monetary policy, starting at 9:10 a.m. ET. The benchmark index has closed at a record high in each of the past four sessions. This is a highly-anticipated speech, as reports indicate Mr. Powell could begin to outline a new framework in which the Fed adopts an "average inflation target." Roughly, this means the Fed could let inflation run past 2.0% yr/yr to balance out the years when inflation ran below 2.0%. The speech will be held virtually and is part of the Fed's annual Jackson Hole Economic Policy Symposium. On the corporate side, shares of Abbott Labs (ABT 113.00, +9.81, +9.5%) are up 9.5% in pre-market action after its 15-minute COVID-19 antigen test was granted Emergency Use Authorization from the FDA. Abbott will sell this test for $5. The search for a COVID-19 vaccine grabs most of the headlines these days, but attacking the virus is really a three-pronged approach: vaccine, treatment, and testing. There is some good news on the testing side today as Abbott (ABT +8%) announced that the FDA has issued Emergency Use Authorization (EUA) for its BinaxNOW COVID-19 Ag Card rapid test. Here are some of the benefits of Abbott's offering: Abbott describes the test as a rapid, reliable, and highly portable tool, measuring about the size of a credit card, used for detecting active coronavirus infections at massive scale. The test delivers results in just 15 minutes with no instrumentation or equipment required, with sensitivity of 97.1% and specificity of 98.5% in clinical study. Abbott makes the point that with lab-based tests you get excellent sensitivity, but might have to wait days or longer to get results. With a rapid antigen test, you get a result right away, getting infectious people into quarantine. Abbott will sell this test for just $5, and Abbott is also providing a free app that allows people to display their BinaxNOW test results when asked by workplaces and schools. The company will ship tens of millions of tests in September, ramping to 50 mln tests a month at the beginning of October.While this is great news, the one drawback we see is that BinaxNOW is limited for use by healthcare professionals and only at point-of-care settings. It's not like you'll be able to have one in your home. However, it's certainly an important step forward and will help ease the burden on labs; capacity overload at labs is largely responsible for the long turnaround times currently. Developing a vaccine is obviously the holy grail to combat this virus, but for one to be developed and administered on a large scale is going to take time. Producing a rapid test is a close second in terms of importance. The ability to provide a yes/no result to a tested patient before he or she leaves the doctor's office is critical, as such immediate information may allow an infected patient to take prompt action to avoid infecting others and to notify their contacts rather than waiting several days for results. The other aspect to this is that it's reassuring that big names like Abbott are aggressively working to fight COVID-19. If this news came from some small medical diagnostic company, it would be good news. However, it's even more reassuring that it comes from a massive and well-respected company like Abbott. In economic data, the weekly Initial Claims (Briefing.com consensus 1.000 million) and Continuing Claims report and the second estimate for Q2 GDP (Briefing.com consensus -32.9%) will be released at 8:30 a.m. ET, followed by Pending Home Sales for July (Briefing.com consensus 5.6%) at 10:00 a.m. ET. U.S. Treasuries have ticked higher in front of Fed Chair Powell's speech. The 2-yr yield is down one basis point to 0.14%, and the 10-yr yield is down one basis point to 0.68%. The U.S. Dollar Index is flat at 93.01. WTI crude futures are down 0.7% to $43.11/bbl. In U.S. Corporate news:
On The Move Laura makes landfall in Louisiana Category 4 Hurricane Laura has made a 'catastrophic' landfall in Louisiana, according to the National Hurricane Center, which could render wide areas uninhabitable for weeks or months and knock out power for just as long. While the storm has also threatened the majority of Gulf oil and natural gas production, consumers are unlikely to see big price hikes because the pandemic has decimated energy demand. Officials are still assessing the extent of destruction as search and rescue missions begin in battered neighborhoods near the coast. FDA approves $5, 15-minute COVID test Abbott Laboratories (NYSE:ABT ) is up 10% in premarket trade following news that the FDA granted emergency use authorization for the company's 15-minute COVID-19 test that will be priced at just $5. Abbott says BinaxNOW works without relying on lab equipment - at a time when labs can take as long as two weeks to produce results - and uses a nasal swab and a small reactive card that can be administered by a range of healthcare workers, including pharmacists. The company plans to ship "tens of millions" of tests in September, ramping to 50M tests per month by the end of October. Stocks Following threats from Washington to delist Chinese firms that fail to meet its auditing requirements, China is now proposing to let U.S. regulators audit its state-owned enterprises. The concessions are aimed at solving a long-running accounting dispute, but would insist on redacting some information on national security grounds. It may go a long way in resolving renewed tensions. Beijing fired four missiles into the South China Sea overnight after the U.S. blacklisted 24 companies for their efforts in helping China "reclaim and militarize" outposts in the disputed waterway. Consumer Amazon expands beyond Whole Foods Moving further into the grocery sector to challenge Walmart (NYSE:WMT), Kroger (NYSE:KR) and Albertsons (NYSE:ACI), Amazon (NASDAQ:AMZN) today is opening the first location of its new chain of Fresh grocery stores in Woodland Hills, California. The 35,000-square foot store will debut the Dash Cart, a smart grocery cart that tracks shoppers' items and allows them to skip the checkout line, and feature Echo Show devices to ask Alexa where certain items are located. There will also be a service counter for people to pick up orders from Amazon.com, and they can also complete returns there without having to package their items in boxes. What else is happening... NBA Postponed playoff games amid player boycotts.
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