🐂 Close encounters

Markets

Throughout the month of August, the Nasdaq Composite Index faced challenges, but it is now executing a remarkable comeback reminiscent of a classic Tom Brady two-minute drill in football. The index, which is heavily focused on technology stocks, experienced its most successful trading day since June. This marks the third consecutive day of positive performance, attributed to notable increases in the value of prominent internet companies and Nvidia's achievement of an all-time high stock price.

U.S. Home Prices Held Steady in June

In June, housing prices remained steady compared to the previous year due to the influence of elevated mortgage rates, which deterred both potential buyers and sellers from active participation in the market.

The S&P CoreLogic Case-Shiller National Home Price Index, a gauge of home prices nationwide, displayed no change in year-over-year values for June. This contrasts with a 0.4% annual decline seen in the preceding month.

On a month-to-month basis, the index displayed a 0.7% increase in June, adjusted for seasonal factors. This marks the fifth consecutive monthly rise.

The surge in mortgage rates witnessed in the past year had the effect of reducing affordability for home purchases, consequently leading to a decline in market participation by many potential buyers. However, the impact on home prices at a national level was relatively minor, and these prices are now displaying a slight upward trend. The persistently low inventory of homes available for sale has played a role in maintaining price levels, as homeowners benefiting from low fixed mortgage rates are hesitant to put their properties on the market.

Lisa Sturtevant, the chief economist at Bright MLS, remarked, "Although housing prices experienced a year-on-year decline in June, there are indications that prices might be on an upward trajectory. Despite elevated mortgage rates, home prices have continued to rise over the past months due to the constrained supply in the market."

Health

Biden takes on big Pharma to lower drug prices

The Biden administration has taken a significant stride towards reducing drug expenses for Americans by revealing a highly anticipated roster of ten prescription drugs that will undergo initial negotiations with Medicare. These medications encompass prominent treatments like the blood thinner Eliquis, co-developed by Bristol-Myers Squibb and Pfizer, as well as the diabetes medication Jardiance, created by Eli Lilly and Boehringer Ingelheim.

This move has stirred substantial reactions within the pharmaceutical sector, with companies expressing deep concern. It stands as one of the most impactful actions ever taken against the industry, prompting these companies to assemble legal teams with the intention of preventing its implementation.

The Background

Medicare, the government's healthcare program covering 65 million citizens, was previously unable to directly negotiate drug prices with pharmaceutical manufacturers. However, this changed when Democrats incorporated this provision into the Inflation Reduction Act last year. This act was one of the few components within the extensive bill that genuinely aimed to address inflation.

The underlying concept is that by harnessing the bargaining influence of the largest healthcare buyer in the United States, both the government and consumers will realize substantial savings on drug expenditures.

Surprisingly, the public favors this notion. According to a KFF survey conducted last year, nearly 90% of Democrats and 77% of Republicans expressed support for the policy. This strong backing likely stems from the fact that, as of 2019, the United States was spending roughly double on prescription drugs in comparison to peer countries, as indicated by OECD data.

Pharmaceutical Industry's Response

Prominent pharmaceutical companies, such as J&J, Merck, and Bristol, have already filed lawsuits against the government's efforts to implement Medicare negotiations. They argue that this move is unconstitutional. They specifically claim that the Biden administration is violating the Fifth Amendment's prohibition on seizing private property for public use without providing fair compensation. The pharmaceutical industry also asserts that by constraining their revenues, the government will discourage the development of future life-saving treatments.

Looking Ahead

Although the new drug pricing regulations are slated to take effect in 2026, there is a possibility that this matter will be debated in the Supreme Court before that time.

Crypto

Bitcoin gets a boost from landmark ETF ruling

application by Grayscale, a cryptocurrency investment company, to establish a spot bitcoin exchange-traded fund (ETF). This development caused the price of bitcoin to increase by approximately 6.5%. The crypto sector, which has been relatively inactive, has been anxiously awaiting the introduction of a spot bitcoin ETF (in contrast to existing crypto ETFs built upon futures), as it has the potential to draw a significant amount of investment and attention from individual investors. The SEC has indicated that it is currently assessing this ruling.

Environment

Florida braces for “catastrophic” Idalia

Propelled by exceptionally high ocean temperatures, Hurricane Idalia has intensified into a Category 3 storm and is projected to reach the shores of Florida's Big Bend region this morning. Meteorologists are issuing alerts about the formidable nature of Hurricane Idalia, which could potentially result in storm surges that pose a risk to life across Florida's western coastline, extending from the panhandle to Tampa. Governor Ron DeSantis has advised individuals in the storm's trajectory to prepare for likely power outages. Interestingly, there has been a pattern of particularly impactful Atlantic storms commencing with the letter "I" since 1955.

Media

AI sports reporter not ready for the big leagues

Following a wave of social media criticism over its comically inadequate AI-generated high school football reporting, the Columbus Dispatch and its parent company Gannett have declared a temporary halt to their local AI sportswriting project.

The incident unfolded when an AI-composed article recapping a Westerville, Ohio football game gained viral attention for its near-incomprehensible content. The piece contained phrases such as "a close encounter of the athletic kind" to describe the match. One sentence notably stated, "The Warriors chalked up this decision in spite of the Warhawks’ spirited fourth-quarter performance," a sentence that seemingly defies logical sense. Although the Dispatch's ethical guidelines stipulate that AI-generated content must undergo human verification before being utilized in reporting, it remains unclear whether this verification step was carried out. Another AI-written sports article by the Dispatch initially omitted team names, replacing them with placeholders like "[[WINNING_TEAM_MASCOT]]" and "[[LOSING_TEAM_MASCOT]]." Subsequently, the Dispatch has taken measures to correct errors in AI-generated stories.

Looking at the broader picture, prominent news organizations are still in the process of determining how to integrate AI into their reporting workflows. Entities like Reuters and the AP have issued guidelines to define the role of AI in newsrooms. Google is reportedly testing an AI tool designed to assist journalists in producing news content. Expect to encounter more instances where AI plays a role in journalism—experts predict that around 90% of internet content within a few years will be generated by AI, as cited by Axios.

Entertainment

Eminem says ‘no’ to Vivek

During a recent appearance at the Iowa State Fair, GOP presidential candidate Vivek Ramaswamy attempted to project his coolness and White House readiness by rapping Eminem's "Lose Yourself." However, it seems Vivek's effort to connect with the crowd fell short. Eminem responded by demanding that BMI, the music rights company, remove his music from the pool of over 20 million songs licensed to Vivek's campaign. Subsequently, Vivek agreed to refrain from using Eminem's music for public performances in the future.

Taking a broader perspective: Eminem's experience is not unique, as numerous artists have expressed discomfort with political candidates using their music during campaigns without proper authorization.

Rock icons Foo Fighters were displeased with John McCain for featuring their hit "My Hero" at rallies during his 2008 presidential campaign without obtaining permission. Similarly, McCain's rival, Barack Obama, received a request from Sam Moore of the soul duo Sam and Dave to discontinue playing their track "Hold On, I'm Comin'."

More recently, Donald Trump faced opposition, including cease-and-desist letters, from at least 16 musical acts and their representatives, including The Beatles and Rihanna, who were against their songs being associated with his White House bids.

Fortunately for these artists, they typically have the option to prevent politicians from utilizing their music, thanks to the policies of organizations like BMI.