Thursday Morning Reads

Thursday Morning Reads


  • FDA will study boosters for 16 and 17 year olds without advisory committee (PFE, BNTX, MRNA, JNJ). Bloomberg
  • Lyft (LYFT) employees will not return to offices until 2023. Bloomberg
  • Senate votes 52-48 to block President Biden's vaccine mandate on private employers, but House is not expected to bring this up for a vote. However, the vaccine mandate is still currently blocked by the courts (MRNA, PFE, BNTX, JNJ). NY Times
  • White House aiming to tighten enforcement of Iran sanctions (USO, XLE). WSJ
  • Senators believe more regulation is needed for social media (FB, TWTR, SNAP, GOOG). WSJ
  • Toyota (TM) suspended production at two plants amid chip shortages. Reuters
  • Apple (AAPL) car project lost 3 more key engineers. Bloomberg
  • Starbucks (SBUX) union vote will take place in Buffalo, NY. WSJ








Smoke-free generation

In one of the toughest crackdowns on the tobacco industry, New Zealand has announced plans to prevent young people from ever being able to buy cigarettes. The initiative would create a "smoke-free generation" by 2027, ensuring that anyone born after 2008 will not be able to purchase cigarettes or tobacco products in their lifetime. The level of nicotine in cigarettes available to older people will also be reduced by 2025, while the number of retailers able to sell cigarettes will be slashed from 2024 (from 8,000 to under 500).

Flashback: The government first introduced its smoke-free goal back in 2011 to ensure that the national smoking rate was reduced to less than 5% by 2025. Another law in 2018 was subsequently passed requiring tobacco products to be sold in dark brown/green colored packaging, with no company logos and the same font for all brands. Taxes were also raised on the products, though the country did adopt vaping as a pathway to help smokers quit tobacco.

"This is a historic day for the health of our people," said Dr. Ayesha Verrall, associate health minister. "We want to make sure young people never start smoking so we will make it an offense to sell or supply smoked tobacco products to new cohorts of youth." The age-based ban would increase annually, prompting investors to keep an eye on their stakes in Altria (NYSE:MO), Philip Morris (NYSE:PM) and British American Tobacco (NYSE:BTI).

Outlook: Around 13% of New Zealand adults smoke (out of a population of 5M), down from 18% almost a decade ago. However, the current smoking rate among the indigenous Maori population stands at 31%, way higher than the national average. The sweeping crackdown on smoking could also lead to a black market for tobacco, and a statement from the health ministry acknowledges the risk, noting "customs will need more resources to enforce border control". (29 comments)

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A fourth dose?

Three shots against Omicron is equivalent to two shots against the original coronavirus strain, Pfizer (PFEBNTX) announced after completing its first study on the new variant. That would mean high antibody levels and efficacy of 95%, though the data collected in the study was based on a pseudo-virus, or a strain constructed in Pfizer's lab to replicate Omicron. Pfizer is looking to produce the same results with the real virus (results will be published in a week or two), but the ultimate proof will come from real-world data at the end of the month.

Snapshot: Once a more accurate picture is assembled, Pfizer will determine if a separate Omicron-specific vaccine is needed. The company is already at work with a jab targeting the variant and said it could be ready by the end of March. CEO Albert Bourla also related that treatments such as Pfizer's oral antiviral pill, Paxlovid, will help prevent hospitalizations and control COVID-19 during the winter.

As more and more shots are needed, some are even starting to talk about a fourth vaccine dose. Bourla noted that a jab could come "faster" than expected after previously projecting that a fourth shot would be needed 12 months after the third. He also anticipates new variants to emerge in the future and the company will continue monitoring to see if vaccine adjustments are needed.

Go deeper: Israel is already among the first in the world to consider authorizing a fourth COVID booster dose for immunocompromised patients and other at-risk populations. "There are some vaccines that are very efficient, like the ones against childhood diseases. There are also vaccines that need to be administered every year, like the one against the flu," said Prof. Cyrille Cohen, head of the immunology lab at Bar-Ilan University. "I think that eventually, a mix between vaccines and natural exposure will help us make the coronavirus less threatening. At the moment, vaccines are the best way to fight the pandemic, and we have to be grateful for that." (48 comments)

GameStop drops

Meme favorite GameStop (GME) reported earnings after the bell on Wednesday, but the company did not get much love from the WSB crowd or others trying to make a quick buck. Shares fell 4.4% to $166 after the video game retailer reported that its losses widened in the fiscal third quarter. Specifically, its net loss grew to $105.4M, or $1.39 per share, from a loss of $18.8M, or $0.29 per share, a year earlier.

Bigger picture: Contributing to the EPS miss were rising inventories, as the company tried to get ahead of supply chain problems and be well-stocked for the holiday season. At the close of the quarter, inventory totaled $1.14B vs. $861M in FQ3 of 2020. GameStop has reported annual losses for three consecutive years, as gamers continue downloading titles over the internet and publishers release more free games on smartphones and tablets.

"Once again these were not great numbers," declared Loop Capital's Anthony Chukumba, adding that "the press release was literally six bullet points that didn't give a lot of details on what the strategy is to turn this business around." GameStop suspended giving guidance last March, citing pandemic uncertainty, though it still hasn't resumed the practice.

Transformation attempt: The company has recently been focusing on growing its e-commerce division and improving customer service. Over the summer, GameStop named former Amazon veterans Matt Furlong and Mike Recupero as its chief executive and financial officers, respectively, while shareholders voted Chewy co-founder Ryan Cohen as chairman and elected an entirely new slate of boardroom directors. It has also opened new offices in Boston and Seattle to draw in talent from the tech hubs. (32 comments)

Largest lab-grown steak

There are battles being waged in the #plantbased theater, driven by a shift in consumer appetite toward environmentally friendly products. However, dairy and meat plant-based items aren't the only alternative protein range. Lab-grown meat, as well as fermentation startups, are still in the early stages, and some have been hit store shelves as they look to ramp up production.

The latest? MeaTech 3D (NASDAQ:MITC) has created the world's largest lab-grown steak, featuring real bovine cells that mature into muscle and fat. The 3.67 oz steak was made using 3D printing, where stem cells taken from cow tissue were incorporated into "bio-inks" that were then layered and matured in an incubator. The steak was also able to produce grill marks when cooked, and "tastes, smells and feels just like the farmed variety."

"The breakthrough is the culmination of over one year's efforts in our cellular biology and high-throughput tissue-engineering processes, as well as our precision bioprinting technology," CEO Sharon Fima declared. "We believe we have placed ourselves at the forefront of the race to develop high-end, cell-based meat products." Shares of MeaTech rose 1.7% premarket to $7.75 on the news.

Next moves: MeaTech hopes to start marketing its products in 2022, with a pilot that will sell cultured fat as an ingredient for other products. Down the line, it aims to produce cultured meat at the same cost as conventional meat, but it's too early to say how long that would take and if it could be scaled up to a reasonable cost. It was only a year ago that Singapore became the first nation to approve lab-grown meat, with "chicken nuggets" made by U.S. company Eat Just served to consumers in the country. (7 comments)

Today's Markets

In Asia, Japan -0.5%. Hong Kong +1.1%. China +1%. India +0.3%.
In Europe, at midday, London -0.1%. Paris flat. Frankfurt -0.2%.
Futures at 6:20, Dow -0.5%. S&P -0.5%. Nasdaq -0.4%. Crude -0.2% at $72.20. Gold -0.1% at $1783.20. Bitcoin +0.2% at $49374.
Ten-year Treasury Yield unchanged at 1.5%

Today's Economic Calendar

8:30 Initial Jobless Claims
10:00 Wholesale Inventories (Preliminary)
10:30 EIA Natural Gas Inventory
1:00 PM Results of $22B, 30-Year Note Auction
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening...

Bernstein picks likely winners in tackling metaverse debate.

Energy crisis... Elon Musk weighs in on nuclear power.

Enterprise Products (NYSE:EPD) could repurpose pipelines for carbon projects.

Southwest Airlines (NYSE:LUV) boosts revenue guidance ahead of investor event.

Kinross Gold (NYSE:KGC) to buy Great Bear Resources (OTCQX:GTBAFfor $1.4B.

Regulatory options restrictions could be a problem for Robinhood (NASDAQ:HOOD).

Apple (NASDAQ:AAPL) issued stay of injunction in Epic Games case.

Facebook's Meta (FB) says employees can stay at home for longer.

Visa (NYSE:V) launches advisory practice to navigate crypto strategy.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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