Internal | July 26th, 2024

GOOD MORNING

Here's everything you need to know this week: Things are getting spicy in Silicon Valley. OpenAI has just thrown down the gauntlet against Google with a new prototype search engine called ‘SearchGPT.’ Now fully in control of the startup that brought you ChatGPT, Sam Altman has set his sights on taking a bite out of the boys in Mountain View.

SearchGPT aims to leverage advanced AI and integrate conversational capabilities to provide more intuitive and human-like search results. Not creepy at all. OpenAI claims this new product could offer users a more interactive and engaging search experience, stepping up where traditional search engines fall short. And it probably won’t tell anyone to leave their spouse like that other AI.

Meanwhile, Google CEO Sundar Pichai might want to keep his eye on this one if he wants to remain the reigning king of search. It might take more than just a few algorithm tweaks to fend off Altman.

Let’s dive into more detail below.

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BREAKING NEWS
You know it's getting serious when a lot of people battling high inflation and a shaky job market are still paying out of pocket for a miracle drug.

The drug in question? GLP-1s, or glucagon-like peptide-1 receptor agonists, are primarily used to treat type 2 diabetes and obesity. GLP-1s have taken over the nation, with the pharmaceutical industry and Wall Street—think Goldman Sachs, J.P. Morgan, and others—salivating like a once chubby kid eyeing his third slice of birthday cake.

Initially projected to hit $100 billion in 2023 sales, estimates are now soaring to $150 billion by the early 2030s. But there’s a lingering question: Is this new wonder drug too good to be true?

WHAT HAPPENED
Top market players like Eli Lilly and Novo Nordisk have seen their stocks dip over the last few days, but so has the rest of the market. Instead of fixating on Wednesday’s $1.1 trillion wipeout, zoom out a bit, and you'll see Eli Lilly, Novo Nordisk, and others enjoying double-digit gains for the year, suggesting that the market sees promise.

Eli Lilly and Novo Nordisk lead the pack with valuations of $853.94 billion and $636.17 billion, respectively. Roche Holding and Amgen follow with substantial, though comparatively modest, market caps of $249.23 billion and $179.46 billion. Pfizer stands at $167.731 billion. Smaller entities like Viking Therapeutics and Structure Therapeutics, valued at $5.559 billion and $2.55 billion, represent potential growth opportunities in the evolving pharmaceutical landscape.

On Thursday, Viking Therapeutics (VKTX) saw its stock surge over 33% to $67.25 after announcing plans to accelerate its experimental weight-loss injection into late-stage trials sooner than expected. This significant jump shows that despite recent market volatility, positive news from smaller companies in the weight-loss drug sector can still drive substantial growth and higher valuations. Interest in obesity treatments reveals a potential door for smaller companies like Viking and Structure Therapeutics to show promise as estimates continue to rise.

"The first half of 2024 was marked by strong momentum in the company's pipeline programs, as we reported successful outcomes from three different clinical trials and began preparing for the next steps with each program," stated Brian Lian, Ph.D., CEO of Viking. "The Phase 2 VENTURE study of VK2735 in obesity demonstrated up to approximately 15% reduction in body weight from baseline following 13 weeks of dosing, as well as promising safety and tolerability."

While the weight loss angle is a major draw, it's not just about shedding pounds. People with diabetes and cardiovascular disease are also seeing positive results, with the FDA now seeking approval for GLP-1 drugs to treat sleep apnea. Researchers are finding potential applications for Alzheimer’s, substance-use disorders, kidney disease, smoking cessation, and more.

But let's not get carried away and have South Park come after us (if you haven’t seen their episode on Ozempic, do it now). All this hype may sound too good to be true. Is the industry a bubble? Too risky? Hitting a ceiling no one can see? Or is this kind of enthusiasm driven by a growing customer base, technological progress, and stirrings of its own medical revolution?

CONTINUE READING ➔

BREAKING NEWS
We got some fresh economic data Thursday morning, and it's a classic "good news, bad news" situation. The latest GDP numbers show Uncle Sam feeling pretty flush with economic growth blowing past forecasts. Inflation is slowing, and jobless claims are down. Great news for anyone hoping for a September interest rate cut, right? Well, hold that thought.

While the inflation stats are promising, their effects are showing up elsewhere. The personal savings rate dipped, indicating Americans are still spending despite higher prices, but their safety cushion is deflating fast. And the housing market looks, well, pretty weak right now. That sound you hear is Fed Chair Jay Powell getting a migraine.

WHAT HAPPENED
According to the Commerce Department, GDP grew at a robust 2.8% annualized rate in Q2, blowing past Wall Street’s modest 2.1% expectation. So, what's driving this growth? It turns out we're all spending like there's no tomorrow. Personal consumption expenditures rose 2.3% this quarter, up from 1.5% in Q1. Both services and goods spending saw increases because, why not?

Inventories added a nice 0.82 percentage points to the total growth picture, showing that stocking up isn't just for survivalists anymore. Imports also jumped 6.9%, which isn’t great since imports subtract from GDP, but hey, at least we're buying more stuff.

On the inflation front, the personal consumption expenditures price index rose 2.6% this quarter, down from 3.4% in Q1. Core PCE prices, which exclude food and energy, were up 2.9%, still cooler than the previous 3.7%. And initial jobless claims fell to 235,000 for the week ending July 20, right in line with expectations. Continuing claims edged down to 1.85 million. Yay.

But let’s kill the vibe. The personal savings rate dropped to 3.5% from 3.8% in Q1. On that note, The Philadelphia Federal Reserve reported that credit card balances are at an all-time high, with revolving debt balances growing. The housing market is also feeling the squeeze. Thanks to high borrowing costs and dwindling savings, residential investment shrunk in Q2, leading to an underwhelming spring home-buying season.

CONTINUE READING ➔

BREAKING NEWS
Most of us have fond memories of playing video games as children, be it booting up the Super Nintendo (aging ourselves here), Playstation, Gameboy, or, most recently, your Playstation 5 or Xbox One. These vehicles of innocent fun, distraction, and button mashing were a new way for millions to unplug from the real world and into one of fantasy and adventure.

Then, the inevitable happened: someone would burst through the door and tell you to go outside and do something active, productive…anything!

Well, that might not be the case in the near future. The International Olympic Committee (IOC), in an effort to stay in line with today's youth and the tech that comes along with it, has decided to create the Olympic Esports Games, whose first edition will be held in 2025 in the Kingdom of Saudi Arabia (an indoor place to be sure).

IOC President Thomas Bach said: “This is truly a new era for the IOC. With the confirmation by the IOC Session of the creation of the Olympic Esports Games, we are keeping up with the pace of the digital revolution.

There is no way the contestants in Olympia at the first games in ancient Greece, could have seen this coming.

WHAT HAPPENED
Now whenever kids spend all day playing video games, they can claim they're training for the Olympics, and they technically aren't lying. So much for fencing or ice curling.

The competition to play in the Olympic Esports Games will be steep. The global gaming landscape has experienced mindboggling growth over the years, with the number of active video gamers reaching a staggering 3.32 billion worldwide, marking an increase of over 1 billion players in just eight years.

The video game market ate a Mario “Super Mushroom,” it seems, ballooning to an estimated worth of $282 billion according to Statista, with an expected annual growth rate (CAGR) of 8.76% from 2024 to 2027, with esports players contributing significantly to this figure. The United States, seemingly obsessed with any iteration of bread and circuses, leads the charge in competitive gaming, boasting over three times more active esports competition players than any other nation, reflecting the USA’s dominant $106.82 billion video game industry.

Asia is also the epicenter of gaming culture, home to a colossal 1.48 billion gamers – more than Europe, Latin America, and North America combined.

The gender distribution in gaming, to go against the typical stereotype, reveals a relatively balanced picture, with approximately 1.7 billion male gamers and 1.39 billion female gamers globally, which should be attractive regarding possible mixed-gender teams in the future.

All of these positive figures and many more like them reveal the IOC’s and Saudi Arabia’s forward-looking interest in the world of Esports Games.

As IOC President Thomas Bach said, “This is truly a new era for the IOC. With the confirmation by the IOC Session of the creation of the Olympic Esports Games, we are keeping up with the pace of the digital revolution…further proof of the attractivity of the Olympic brand and the values it stands for among young people.”

CONTINUE READING ➔