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Today in the Market (8/22/2022)

Good Evening. On Monday, stocks took a beating as they all declined as the market rise from this summer came to a standstill.

The S&P 500 was down 2.14%, the Nasdaq was down 2.55%, and the Dow was down 1.91% at closing.

AMC IS AT IT AGAIN

AMC Entertainment (AMC) has delivered its special APE dividend to the market.  The new class of shares (formally   Preferred Equity Units) known as APE in honor of the retail investors known as “apes” who supported the stock throughout the COVID-19 pandemic, are expected to start trading on the NYSE at some point today. It will have the ticker APE.

What does the new share do? Common stock holders were awarded the Preferred Equity Units last week.  Each APE can be traded in for a unit of common shares in the future.  The scheme is essentially a 2-for-1 stock split and will have dilutive impacts on shareholders.

Going Foward… CEO of AMC Entertainment Adam Aron stated that this latest smart scheme, along with the gold mine AMC purchased earlier this year, will help AMC raise money to pay off debt and consider buying additional theater chains. On top of that, according to what shareholders voted back in 2013, the company might theoretically list five billion APE shares, but Aron emphasized that he had no plans to do so.

MEDICARE GETS BETTER

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One of the major beneficiaries of the Inflation Reduction Act is Medicare, which now has the ability to bargain prescription prices for the first time in history. However, this increased responsibility entails a steep learning curve that requires employing someone with more in-depth knowledge of the drug sector.

The Centers for Medicare and Medicaid Services (CMS) administrator, Chiquite Brooks-LaSure, stated that the organization will need to fill new positions in order to take on the task and will rely on the expertise of other organizations like the U.S. Department of Veterans Affairs, which already engages in drug negotiations.

As manufacturers try to compensate for the federal government’s price limitations, analysts and experts have already warned of the possibility of a negative impact on overall medical costs. 

Along with medicine prices, the Act also sets a $35 cap on insulin prices.

Overall, the Act has some immediate effects, like capped out-of-pocket expenses and assured access or pricing for specific medications. However, adjustments need to be made to the longer-term negotiation process, which is scheduled to start in 2026 with 10 medications and rise yearly to 20 drugs.

THE WEEK AHEAD

The end of earnings… finally: Names like Nvidia, Peloton, Zoom, Dollar General, and Salesforce will bring down the house after 95% of S&P companies have already reported.

Jackson Hole Economic Symposium: Fed Chair Jerome Powell will give a significant speech on Friday as a part of the Jackson Hole Economic Symposium, an annual gathering where financial experts from around the world discuss economic concerns. The biggest problem this year is undoubtedly inflation.

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