China Is Pivotal For US Inflation's Path

 by Simon White, Bloomberg macro strategist,

A more forthright response from China to its deflationary predicament would further support US inflation that is already proving sticky, adding to longer-term upwards pressure on term premium and thus yields.

There are upside risks to the US PCE release today after the higher-than-expected core-PCE price index released on Thursday.

Inflation is more stubborn than most expected.

That’s proven to be the case even without China so far managing to engineer robust recovery.

The San Francisco Fed separates out core PCE to a cyclical and an acyclical component, with the first being those inputs to PCE most correlated to Fed policy and acyclical is anything left over.

Most of the fall in core inflation has been driven by the acyclical component, while the cyclical has only fallen marginally, inferring that much of the disinflation was not directly down to Fed policy.

The acyclical component, though, is highly correlated to China PPI, i.e. China is a big driver of global inflation pressures. If the country had had stronger recovery, it is likely the US (and other countries) would be contending with a larger inflation problem than they currently have.

That’s why China’s next move is so important. Falling bond yields, in contrast to rising ones in almost every other country, signal the economy is nearing a crunch point. Typically, China has responded with much broader stimulus - reflected in rising M1 growth - when yields have seen such a fall.

If it responds similarly again, inflation pressures in the US will receive an unwelcome boost even as it is already dealing with price growth that is becoming embedded.

https://www.zerohedge.com/markets/china-pivotal-us-inflations-path

Bayer investor Deka takes a stand against CEO in annual vote

 Bayer shareholder Deka Investment said on Friday it would not join other large investors in supporting the healthcare and agriculture group's management at its annual general meeting.

Two other larger German mutual fund management houses, DWS and Union Investment, have said they would vote in favour of approving the management board's actions while shareholder advisory firms Glass Lewis and Institutional Shareholder Services (ISS) have recommended such a vote.

Bayer CEO Bill Anderson will face questions at the AGM over his decision in March to suspend for up to three years any preparations to break apart the German maker of pharmaceuticals, crop protection products and consumer health remedies.

Anderson, who became CEO in June 2023, has had a tumultuous start with a continued wave of U.S. litigation about an alleged cancer-causing effect of weedkiller glyphosate and a major setback in drug development late last year.

"We don't regard Mr Anderson's start as successful. We would have wished for more of a focus on aspects that are relevant for the share price," Deka's head of sustainability and corporate governance Ingo Speich said in a speech made available to Reuters ahead of the AGM.

The vote on ratifying the executive board's business conduct, which prominently wraps up every German AGM, is largely symbolic because it has no bearing on management's liability or tenure. But it is treated as a key gauge of investor sentiment.

Anderson said in a statement that he would seek to boost drug development, while also tackling litigation, debt and excessive corporate bureaucracy.

"The soul of this company is alive and well," he said, adding that he would work hard to address shareholders' frustration over the falling share price.

Harris Associates, another major Bayer shareholder, has told Reuters it strongly supports Anderson, including his decision to suspend work on breaking up the group.

https://www.yahoo.com/news/bayer-investor-deka-takes-stand-093509049.html

Cigna to offer Humira rivals with $0 copay at specialty pharmacy

 Cigna plans to make close copies of AbbVie's blockbuster arthritis drug Humira available with no out-of-pocket payment to eligible patients in the U.S. using its specialty pharmacy beginning in June, the health insurer said on Thursday.

Cigna said it will stock high- and low-concentration biosimilar versions of Humira from drugmakers including Boehringer Ingelheim, Teva and Alvotech at its Accredo pharmacy.

"Not all biosimilars are created equal," Matt Perlberg, president of Cigna's Evernorth Health Services' pharmacy and care delivery businesses, said in an interview. "We know that patients need options, and we wanted to make sure that we offer the right experience, level of clinical care, and affordability for as many eligible patients as possible."

Unlike easy to manufacture pills that can be copied and sold as generics at a huge discount once patents lapse, complex biologic medicines made from living cells cannot be exactly duplicated. Their close alternatives are called biosimilars.

Despite nine biosimilars being launched in the U.S. last year, AbbVie has held onto more than 98% of the Humira market. Privately-held German drugmaker Boehringer launched its version, Cyltezo, last July but has only managed to sell a couple thousand prescriptions in total since then, according to IQVIA data.

Almost 3 million Humira prescriptions have been written during the same period, although tens of thousands of scripts have started to shift to biosimilar Hyrimoz each week since CVS Health’s pharmacy benefits unit took Humira off the list of drugs it recommends insurers reimburse. Hyrimoz is made by Switzerland's Sandoz.

Cyltezo and Simlandi, from Israel's Teva and Iceland's Alvotech, are designated as interchangeable, meaning they can be substituted for the original without consulting the prescriber.

Simlandi, which was approved in the U.S. in February, is the only interchangeable biosimilar of Humira that also comes in a high-concentration dose.

AbbVie’s high-concentration version of Humira makes up close to 90% of its sales in the United States.

Cigna said these biosimilars will be priced at about 85% lower than the $6,922.62 monthly list price of Humira, and that it had made agreements with the manufacturers as well as its distributor Quallent to bring the out-of-pocket cost down to $0.

The company said the move should save around $3,500 on average per year for some of the 100,000 Accredo patients currently using either Humira or one of its biosimilars. Perlberg did not provide an estimate for how many patients they anticipate switching.

https://finance.yahoo.com/news/cigna-offer-humira-rivals-0-204839763.html

UK Defense Chief Says Ukraine To Increase Long-Range Strikes In Russia

 Just as President Biden was signing into effect the newly approved foreign defense package which includes $60 billion for Ukraine, the United Kingdom also rolled out its own massive aid package (though paling in comparison), first unveiled Tuesday.

Britain announced its single largest aid package for Ukraine yet, at the equivalent of $620 million (£500 million). According to UK NATO officials, the arms include Storm Shadow missiles among a total of 1,600 strike and air defense missiles, four million rounds of ammo, 60 boats, and over 400 vehicles.

Even though the White House is busy cautioning that in the coming months Russia is likely to make more gains on the front lines, according to fresh words of Jake Sullivan, British leadership is still talking about "winning"

Defense Minister Grant Shapps, for example, had this to say about new aid: "This record package of military aid will give President Zelensky and his brave nation more of the kit they need to kick Putin out and restore peace and stability in Europe."

"The UK was the first to provide NLAW missiles, the first to give modern tanks, and the first to send long-range missiles," he added. "Now, we are going even further. We will never let the world forget the existential battle Ukraine is fighting, and with our enduring support, they will win."

Britain's military leadership is also echoing this optimism, with UK defense chief, Admiral Sir Tony Radakin, telling Financial Times that the West's new infusion of military aid will help Ukraine increase its long-range strikes on Russian territory:

Ukraine is set to increase long-range attacks inside Russia as an influx of western military aid aims to help Kyiv shape the war “in much stronger ways”, the head of the UK military has said.

Admiral Sir Tony Radakin acknowledged the downbeat mood surrounding Ukraine’s defence in an interview with the Financial Times, admitting the country was facing a “difficult” fight to repel advancing Russian forces.

But Britain’s chief of defence, a key figure in the west’s military support for Kyiv, stressed that such a gloomy “snapshot” of the war failed to recognise longer trends more in Kyiv’s favour.

Adm. Radakin continued, "As Ukraine gains more capabilities for the long-range fight . . . its ability to continue deep operations will [increasingly] become a feature" of the war. He emphasized of new weapons systems, "they definitely have an effect."

UK leadership has of late put the country's defense industry on a "war footing" in preparation to support Kiev for the long haul. More of Radakin's words point to escalation (and not negotiations) in the following...

"Don’t expect anyone to say publicly ‘this is the plan’ and A, B and C are now going to happen," he told FT. Some aspect of Ukraine's strategy and operations "will be hidden . . . some will be dictated by a tactical or operational advantage, and some also depends on more foundational aspects," he added.

Nowhere in the UK defense chief's interview was acknowledgement that these policies could lead to runaway escalation, and an eventual direct confrontation between nuclear-armed powers. The Kremlin has in response vowed that it will take more territory in Ukraine in order to counteract the longer range of NATO missiles.

https://www.zerohedge.com/geopolitical/uk-sends-record-aid-package-defense-chief-says-ukraine-increase-long-range-strikes

HCA Healthcare 1Q Revenue Tops Estimates

 HCA Healthcare posted better-than-expected revenue in its latest quarter, boosted in part by higher trips to emergency rooms and surgeries.

The hospital owner logged net income of $1.59 billion, or $5.93 a share, for the first quarter, up from $1.36 billion, or $4.85 a share, a year earlier. Adjusted earnings were $5.36 a share, above analysts' estimates of $5.06 a share.

Revenue rose to $17.34 billion from $15.59 billion. Analysts polled by FactSet expected $16.81 billion.

"The strong fundamentals we saw in our business this past year continued into the first quarter of 2024," said Chief Executive Sam Hazen.

Metrics related to facility admissions, emergency rooms visits and facility inpatient surgeries all increased from the prior-year period.

https://www.marketscreener.com/quote/stock/HCA-HEALTHCARE-INC-7534808/news/HCA-Healthcare-1Q-Revenue-Tops-Estimates-46546181/

AbbVie raises annual profit forecast on strong Skyrizi sales

 AbbVie raised its annual profit forecast on Friday after strong sales of its immunology drug Skyrizi and cancer drug Imbruvica helped the company beat Wall Street estimates for the first quarter.

The company now expects adjusted profit of between $11.13 and $11.33 per share for this year, compared with $10.97 to $11.17 estimated earlier.

Analysts on average expect annual profit of $11.10 per share, according to LSEG data.

AbbVie and its investors have focused on sales of newer immunology drugs Skyrizi and Rinvoq to offset the erosion of sales from Humira - the world's biggest selling drug till it lost exclusivity and saw the entry of close copies last year.

Skyrizi sales of $2.01 billion beat estimates of $1.94 billion, while Rinvoq's $1.09 billion came in slightly higher than expectations of $1.06 billion.Sales of Humira fell nearly 36% to $2.27 billion for the quarter, roughly in line with estimates of $2.28 billion.

Despite nine biosimilars being launched in the U.S. last year, AbbVie has held onto more than 98% of the Humira market.

Earlier this month, German drugmaker Boehringer Ingelheim said it will lay off some of its U.S. sales force due to poor sales of its Humira biosimilar in the region.

Investors have also been concerned about a potential price drop for AbbVie's Imbruvica from 2026 after it was selected as one of the 10 drugs subject to negotiations with U.S. Medicare insurance plans.

The company in October took a $2.1 billion charge related to an expected drop in Imbruvica sales. A final price is expected to be announced on Aug. 1.

Imbruvica generated $838 million in the quarter, beating estimates of $744 million.

AbbVie recorded an adjusted profit of $2.31 per share, surpassing estimates of $2.23 per share, while its total sales of $12.31 billion came in above expectations of $11.92 billion.

https://finance.yahoo.com/news/abbvie-raises-annual-profit-forecast-114431588.html

Centene Increases 2024 Guidance

 Centene (CNC) updated 2024 EPS guidance floor to greater than $5.94 and 2024 adjusted EPS guidance floor to greater than $6.80. Total revenues are projected in a range of $147.5 billion to $150.5 billion. Analysts polled by Thomson Reuters expect the company to report profit per share of $6.77 on revenue of $146.51 billion. Analysts' estimates typically exclude special items.

First quarter earnings totaled $1.16 billion, or $2.16 per share compared with $1.13 billion, or $2.04 per share, in last year's first quarter. Excluding items, Centene reported adjusted earnings of $1.22 billion or $2.26 per share for the period. Analysts on average had expected the company to earn $2.08 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

The company's revenue for the quarter rose 3.9% to $40.41 billion from $38.89 billion last year.

https://www.rttnews.com/3442229/centene-increases-2024-guidance.aspx