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THIS WEEK IN THE MARKETS 8/14


July CPI Data

Consumer prices for everyday goods and services increased in July as demand for travel and restaurants kept inflation hot, but met economist expectations. The Department of Labor reported that consumer prices rose 5.4% in July from last year, matching the largest jump since August 2008. Core inflation (excludes energy and food) rose by 0.3%, meeting under the forecasted 0.4% increase and June’s increase of 0.9%. July saw a 0.2% increase in used car and truck prices compared to the 10% jump in the prior month. The nationwide rollout of vaccines saw an 11.8% increase in consumer spending from April to June, the second-fastest rate since 1952. Simultaneously, the demand for travel and services has caused many businesses to struggle as supply shortages continue to surge.



Micron, Samsung, and SK Hynix Fall As Fears Hit

Of Memory Demand Drying Up

Major memory chip players such as Micron, Samsung, and SK Hynix fell Thursday as fears of demand for their DRAM slowing down hit investors. Analysts, specifically those from Morgan Stanley, had warned that the price decline in DRAM could be in order as “cyclical conditions for DRAM have started to roll over.” They proceeded to downgrade Micron from overweight to equalweight, and the downgrade coupled with fears has led Micron to shed around -13.58% for the week.

Similar major memory manufacturers such as Samsung and SK Hynix, which trade on the KRX, had similar falls as many also feared that their memory manufacturing divisions would also take a hit. Samsung took a 1.15% decline while SK Hynix fell another 3.79%. Combined they controlled more than 70% of DRAM market share in the first quarter so investors were fearful that a decline in price and decline in demand was going to negatively affect their businesses.




Sesen Biotech Falls 70% as FDA Denies Approval of

Treatment of Bladder Cancer

Shares of Sesen Biotech slid late Friday as the FDA has formally denied the company’s Biologics License Application (BLA), meant to treat unresponsive non-muscle invasive bladder cancer. Vicineum, which was the name of the treatment, was officially rejected after the U.S. Food and Drug Administration had sent the company a Complete Response Letter (CRL) where they outlined chemical, manufacturing, and control issues as well as saying that they can not approve the drug in its current form.

The Massachusetts based company derived their treatment from fusion proteins medicines. These are medicines that are made from the combination of multiple genes, and they created Vicineum by combining tumor-combatting antibodies with a cytotoxic product. This allowed it to selectively kill cancer cells. Chief Executive Dr. Thomas Cannell was quoted as saying, "We are deeply disappointed by this unexpected result, and it is an unfortunate day for patients suffering from BCG-unresponsive NMIBC," and the company plans to meet with the FDA “as soon as possible.” Shares of SENS were trading at $5.92 before the news and closed at $1.74 on 54.5 million shares of volume.



AMC looking to accept Bitcoin by the end of 2021

AMC Entertainment announced their earnings on Monday and one of the company’s main announcements was that it was going to allow moviegoers in the United States to pay for snacks and tickets using Bitcoin. They plan to accept Bitcoin as payment by the end of 2021 and have the IT systems in place. The company plans to accept other cryptocurrency beside Bitcoin, as they are exploring other crypto avenues. AMC Chief Executive Adam Aron was quoted as saying, "[we are] exploring how else AMC can participate in this new burgeoning cryptocurrency universe, and we're quite intrigued by potentially lucrative business [opportunities]."



Adidas Sells Reebok to Authentic Brands for $2.5B

Adidas is selling Reebok to Authentic Brands for $2.5 billion dollars after reaching a deal. The deal is expected to close during the first quarter of 2022, Adidas plans to pay the majority of it in cash. Authentic Brands Group has been picking up bankrupt brands such as Brooks Brothers, Aeropostale, and Forever 21 in recent years and filed to go public last month. Adidas bought Reebok back in 2006 for $3.8 billion, while the brand was riding high in deals with the NBA and NFL. However, the brand has been underperforming in recent years as other brands like Lululemon, Nike, Under Armour have taken over the athleisure wear market. Reebok only accounts for roughly 7% of Adidas’s sales at the end of 2020, compared to 18% back in 2010

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