Eli Lilly, Novo Nordisk to benefit from new obesity treatments in 2026

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

GLP-1 mania

Scotiabank analyst Louise Chen’s forecast suggests 2026 might be the year of obesity treatments,

“OUR TAKE: 2026 will be another big year for the obesity market, with the launch of oral GLP-1s from LLY and NVO, better access and affordability (MFN, CMS IRA, Medicare, Medicaid) for obesity drugs, and important readouts for the next generation of obesity treatments coming to market in 2028+.

“Overweight/obesity affects more than 2.5 billion people worldwide, but the penetration rate for obesity drugs is only in the single digits. We expect this to increase meaningfully in 2026+.

“We estimate that there are 100+ obesity products in development …

“Positive momentum in the obesity market supports our SO ratings for AMGN, LLY, and PFE, who are key players in the space with important readouts/events coming next year.

“#1. LLY’s retatrutide (GIP/GLP/glucagon) Ph3 obesity and eloralintide (amylin) Ph2 combo data.

“#2. PFE expects to advance 15 obesity studies, and report data for several assets.

“#3. AMGN’s Part 2 Ph2 Maritide (GLP/GIPR) data.

“#4. More M&A since many Biopharmas want to add to their obesity franchises.

Bull peak?

BofA Securities head of global research Candace Browning Platt surveys research showing a near-term peak in investor sentiment,

“Michael Hartnett’s Bull & Bear indicator has moved into Extreme Bullish territory, rising to 8.5 from 7.9 and triggering a contrarian sell signal for risk assets. Readings above 8.0 have often preceded pullbacks, with global equities declining a median 2.7 per cent over the following two months, with a 63-per-cent hit rate. Sentiment data reinforce the cautionary signal: the Fund Manager Survey shows most bullish sentiment in 3.5 years, driven by expectations of rate, tariff, and tax cuts. While he expects 9-per-cent global EPS growth in 2026, Michael Hartnett cautions that the scope for upside surprises appears limited amid rising US unemployment and signs of bond vigilantes slowing the AI capex boom. An upside risk to consider is a meaningful stimulus surprise from China. Michael is bullish on positioning for lower CPI, reflected in going long zero-coupon bonds, mid-cap stocks, Emerging Market equities, and natural resources.

“The key equity volatility lesson from 2025 is that big tech breakthroughs tend to breed big asset bubbles, and 2025 resembles 1996. Ben Bowler shows that AI is following the familiar arc of past transformative tech, from railways to autos to the internet, each marked by multi-year booms and eventual busts. The Nasdaq rally since ChatGPT’s 2022 launch is eerily tracking the post-Netscape path of the mid-1990s, implying a potential peak around April 2028 if history rhymes.”

Growth acceleration

Goldman Sachs economist Jan Hatzius, arguably Wall Street’s most prominent, expects higher than consensus U.S. and global growth next year according to the firm’s weekly Briefings newsletter,

“‘As has typically been the case since the pandemic, we are most optimistic (relative to consensus) in the U.S.,’ writes Jan Hatzius, chief economist and head of Goldman Sachs Research, in the team’s report titled ‘Macro Outlook 2026: Sturdy Growth, Stagnant Jobs, Stable Prices.’ The US is expected to substantially outperform consensus economist forecasts because of tax cuts, easier financial conditions, and a reduced drag on the economy from tariffs. As a result of tax cuts, for example, consumers will receive around an extra $100 billion (0.4 per cent of annual disposable income) in tax refunds in the first half of next year. The narrative for China’s economy is much more mixed, Hatzius writes. GDP is forecast to expand 4.8 per cent as strong exports outweigh sluggish domestic demand … Large parts of China’s domestic economy remain weak. Although the largest drag from the property downturn on GDP growth has probably already taken place (property sales are down 60 per cent and property starts are down 80 per cent from the peak), our economists estimate that the sector will produce a 1.5 percentage point drag on GDP growth next year”

Bluesky post of the day

Diversion

“The Most Worrying Bits from Bloomberg’s Worrisome AI Bubble Q&A with Jason Furman” – Gizmodo