Disappointing economic indicators are taking hold as markets ready for an expected rate cut this July, and one prominent economist and educator warned there’s more of a slowdown than previously forecasted.
"So far, we've had disappointing retail sales. We've had disappointing PMI manufacturing numbers. The ISM numbers were disappointing. [Tuesday's] job vacancies were considerably below expectations," Mohamed El-Erian, president of Queens' College at Cambridge University, said on "The Claman Countdown." "Citi has this ‘index of surprises,’ and we've had nothing but negative surprises."
"And all that is saying to us is that the economy is slowing much faster than most people expected, including the Fed," he continued.
According to the ADP National Employment Report released Wednesday morning, hiring by U.S. companies slowed more than expected in May, pointing to a labor market that is continuing to cool in the face of higher interest rates.
Companies added 152,000 jobs last month, below both the 175,000 increase predicted by LSEG economists and the downwardly revised April gain of 188,000. It marked the worst month for job creation since January.
Data released on Tuesday showed U.S. job openings sinking in April to the lowest level in more than three years, marking another sign that the labor market is beginning to weaken in the face of higher interest rates and stubborn inflation.
The Federal Reserve raised interest rates 11 times beginning in March 2022 in an effort to rein in inflation and cool the labor market. Policymakers have suggested that fast wage growth — the product of a strong labor market — was a contributing factor to the inflation crisis that ravaged millions of Americans' pocketbooks over the past few years.
"That is where the policy mistake comes in. Monetary policy acts with a lag," El-Erian said. "So you are really targeting the economy of tomorrow. But if you do that based on yesterday's data, you are likely to get it wrong."
"When they decided inflation was transitory, when people, including us, were telling them, ‘It's not transitory, pay attention,’ they were afraid of making a major strategic call," the economist added. "And I think that that is where we have the risk right now."
El-Erian said he believes there’s still a 35% chance that the U.S. economy will enter a recession.
"We entered 2023 with people saying a 100% probability of recession, and the U.S. economy surprises on the upside," he pointed out. "Unfortunately, we entered this year a little bit too rosy, and now the economy is slowing."
The United States is warning Israel against "escalation" in Lebanonfollowing fresh Wednesday remarks of Israeli Prime Minister Benjamin Netanyahu which threatened a major offensive due to ratcheting Hezbollah attacks. "We are prepared fora very intense operation in the north. One way or another, we will restore security to the north," Netanyahusaidon a visit to the region.
"We don’t want to see that escalation of the conflict which would just lead to further loss of life from both Israelis and the Lebanese people and would greatly harm Israel’s overall security and stability in the region," State Department spokesman Matthew Miller responded in a daily briefing.
The Biden State Dept. spox urged caution while appearing to downplay the latest bellicose words out of Tel Aviv. "The statements from the Israeli government saying that they are ready for military operation, if necessary, (are) different than saying that they have made a decision to conduct a military operation," Miller continued.
"We are still in a place where we believe they prefer a diplomatic solution," he said while adding that the US fully understands the "untenable situation for Israel" on its northern border.
"There are tens of thousands of Israeli citizens who cannot return to their homes in the north of Israel because it’s not safe to do so because of the … constant Hezbollah shelling and drone attacks in the area," Miller emphasized.
Not only have fires ripped across large swathes of the Galilee region this week as a result of wildfires sparked by Hezbollah drone and rocket attacks, but the Shia paramilitary group backed by Iran has been scoring more and more direct hits on IDF bases and settlements in northern Israel.
On Wednesday an explosive-laden drone was sent against the town of Hurfeish, located several kilometers from the Lebanon border, which wounded at least eleven Israelis, with one in critical condition. Sirens reportedly failed to sound as the drone as inbound, and the IDF says it is investigating.
Times of Israeldetails, "According to initial military assessments, the two drones impacted within a few minutes of each other, with the second seemingly targeting rescue crews who arrived to treat those wounded by the first. Hezbollah has employed such a tactic several times amid the war."
Hezbollah took responsibility for the attack in a statement, saying it was retaliation for a Tuesday Israeli attack Naqoura which took out a Hezbollah member.
The group's leader, Secretary-General Hassan Nasrallah, has been warning that the world will witness Israeli tanks "burn" if they try to enter Lebanese territory...
During the 2006 war Hezbollah shocked IDF commanders by its performance on the battlefield and effective guerilla tactics, and there has since been a general consensus that the group (which receives assistance from the IRGC) is more formidable than previously thought.
With former President Donald Trump facing the possibility of being sentenced to prison just days before the Republican National Convention, GOP officials are formulating backup plans in case the former president isn’t able to receive the Republican party’s presidential nomination in person.
“We'll be thinking about it, and we’re working on that right now,” RNC Chair Michael Whatley told Newsmax in an interview on June 4, when asked whether the Republican Party is preparing for the possibility that the former president can’t attend the convention because he’s behind bars.
The convention, which will take place in Milwaukee on July 15-18, is expected to draw thousands, but President Trump might not be one of them, given his recent felony conviction and the possibility that, on July 11, Justice Juan Merchan could sentence him to prison.
President Trump was recently found guilty of 34 counts of falsifying business records to hide non-disclosure payments, supposedly to prevent bad press and sway the 2016 election in his favor. He maintains his innocence and says he’s the victim of a vindictive political prosecution meant to derail his 2024 comeback bid.
Justice Merchan could sentence President Trump for up to four years on each business records falsification count, with a maximum of 20 years.
The former president said in a June 2 interview on Fox News that he could handle being jailed or imprisoned while calling the people involved in his conviction as “sick” and “evil.”
Trump Nominee No Matter What
The former president and his attorneys have vowed to appeal the conviction, with President Trump even calling on the U.S. Supreme Court to step in before the sentencing date and overturn the guilty verdict.
While a former Manhattan district attorney predicted that President Trump would receive no prison time regardless of any appeals process, GOP officials say they'll be ready to handle whatever scenario presents itself at the convention.
“We expect that Donald Trump is going to be in Milwaukee, and he’s going to be able to accept that nomination,” Mr. Whatley said. “And if not, we will make whatever contingency planning we need to make for it.”
While Mr. Whatley didn’t provide specifics about the contingency plans, he said the RNC will “certainly” have a plan in place to make sure President Trump receives the nomination no matter what.
“We want to have a show that is going to roll out Donald Trump and his vision for America, which is going to set up this election cycle,” Mr. Whatley said while expressing confidence that President Trump will become America’s 47th president when the Election Day dust settles in November.
In response to Mr. Whatley preparing for the possibility of Donald Trump virtually addressing the Republican National Convention, DNC Rapid Response Director Alex Floyd released the following statement:
“Even before Donald Trump became a convicted felon, his inner circle was already staffed by a roster of convicts and fraudsters brought on board for their loyalty to Trump and his MAGA agenda over the rule of law. Now Trump’s hand-picked RNC chair is openly floating Trump calling into the convention from a jail cell because the Republican Party has become completely beholden to a criminal who is willing to undermine our justice system and our democracy to pursue his agenda of revenge and retribution.”
Manhattan District Attorney Alvin Bragg, a Democrat who brought the case against President Trump, has not indicated whether he will ask for a prison sentence.
President Trump’s lead attorney, Todd Blanche, said after the guilty verdict was handed down that it’s unlikely President Trump would be sentenced to prison given his age and that he is a first-time offender. Trump attorney Will Scharf told ABC News on June 2 that the former president will “speedily appeal this unjust verdict.” “I think this case is replete with reversible error,“ he told the outlet. ”We plan to vigorously defend President Trump’s rights in the appellate courts all the way up to the U.S. Supreme Court if necessary.”
‘Breaking Point’
President Trump was asked in the June 2 interview on Fox News for his thoughts about a possible punishment, which could include time behind bars.
“I’m OK with it,” the former president replied. “I saw one of my lawyers the other day on television saying, ‘Oh no, you don’t want to do that to the president.’ I said: You don’t beg for anything.”
Former U.S. President Donald Trump arrives at Trump Tower on May 30, 2024 in New York City. (Stephanie Keith/Getty Images)
At the same time, the former president said he thought the American people would be outraged at such a harsh punishment for him.
“I’m not sure the public would stand for it,” President Trump said. “I think it would be tough for the public to take, you know, at a certain point, there’s a breaking point.”
Asked what Trump supporters should do if the former president were imprisoned, RNC co-chair Lara Trump told CNN they would make their voices heard at the ballot box.
“Well, they’re gonna do what they’ve done from the beginning, which is remain calm and protest at the ballot box on November 5,“ she told the outlet. ”There’s nothing to do other than make your voices heard loud and clear and speak out against this.”
While Democrats have taken to referring to President Trump as a “convicted felon” in their political messaging, a recent confidential memo to RNC leadership indicated that the conviction has had no negative impact on President Trump’s popularity among voters in the seven battleground states of Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania, and Wisconsin.
In fact, an average of polls by RealClear Polling as of June 4 indicates that President Trump leads President Biden by 3.2 points in all seven swing states.
Update(1932ET): Russian President Putin addressed the annual economic forum in St. Petersburg on Wednesday, where he took the opportunity to put the US and NATO on notice concerning Kiev being given the greenlight to use Western weapons to attack Russian territory (detailed below).
He suggested that he's mulling the option of providing adversaries of the West with Russian long-range missiles. Below is what he said:
“That would mark their direct involvement in the war against the Russian Federation, and we reserve the right to act the same way,” Mr Putin told a three-hour meeting with the senior editors of international news agencies.
Because using such Western weapons involves military personnel of those countries controlling the missiles and selecting targets, Mr Putin claimed Moscow could take “asymmetrical” steps elsewhere in the world.
“If they consider it possible to deliver such weapons to the combat zone to launch strikes on our territory and create problems for us, why don’t we have the right to supply weapons of the same type to some regions of the world where they can be used to launch strikes on sensitive facilities of the countries that do it to Russia?” he said.
He then followed ominously with, "We will think about it." But it remains that clearly Russia needs to keep intact its arsenal and advanced weapon supplies as much as possible, considering it could be in for a years-long conflict in Ukraine and with its Western backers. The proxy fight is set to go on for the foreseeable future, and could easily escalate into direct war with NATO at this dangerous point. There was also this interesting moment during a Q&A with journalists...
* * *
Ukraine is already attacking Russian territory with US-supplied long-range weapons, a fresh NY Times investigation has acknowledged. It comes a mere days after the Biden administration greenlighted Ukraine's request to fire American weapons onto Russian soil.
"Yehor Chernev, the deputy chairman of the Ukrainian Parliament’s committee on national security, defense and intelligence, said on Tuesday that Ukrainian forces had destroyed Russian missile launchers with a strike in the Belgorod region, about 20 miles into Russia," NY Times wrote, describing it as a 'first'.
The Ukraine official said that the army used a US-supplied High Mobility Artillery Rocket System, or HIMARS. The revelation came the same day that a UK Telegraph report detailed NATO logistics plans for US troop 'land corridors' in the event of a European ground war with Russia.
Various social media videos and images appeared to show burning and destroyed S-300 and S-400 systems inside Russian territory...
Examining some of the new to emerge images, Rob Lee, a senior fellow at the Foreign Policy Research Institute, described to the Times, "Given the range, type of target, munition availability and change in the Biden administration’s policy, I think it is probable this strike was conducted with HIMARS."
Additionally the report highlighted other evidence pointing to US munitions used in the attack:
On Saturday, Evgeny Poddubny, a war correspondent for Russian state television, shared photographs of what were presented as fragments of American guided rockets found in Russian territory. It was not possible to independently verify when or where the fragments were found.
Ukrainian Deputy Prime Minister Iryna Vereshchuk also hinted that the strike was conducted with American weapons.
Vereshchuk shared a picture (above) of a burning S-300 system on Telegram - but soon after deleted - with the caption, "It’s burning well. This is a Russian S-300. On Russian territory. The first days after permission to use Western weapons on the enemy’s territory."
Russian Deputy Foreign Minister Sergey Ryabkov warned earlier this week, "I would like to caution American officials against miscalculations which may have fatal consequences. For some unknown reason, they underestimate the seriousness of the rebuff they may receive."
Russian media has meanwhile on Wednesday announced the destruction of more foreign weapons stores inside Ukraine with the below statement:
The Russian Ministry of Defense has reported that its forces have successfully hit weapon and equipment storage sites used by the Foreign Legion fighting alongside Ukraine.
"Using operational-tactical aviation, unmanned aerial vehicles, missile troops, and artillery, the Armed Forces of the Russian Federation destroyed the weapon and military equipment depots of the Ukrainian Armed Forces' Hortitsa operational-strategic group and the 'Foreign Legion' fighters,"the ministry clarified.
Several videos of destroyed Russian anti-air systems:
Thus far the Pentagon has not officially commented, neither confirming nor denying, on whether Ukraine has used US long-range weapons inside Russia yet. But the situation is clearly escalating, and quite rapidly, by the day at this point.
More than three months after a cyberattack on UnitedHealth Group's technology unit, some community health centers, which serve 30 million low-income and uninsured patients, are still wading through red tape to receive back payments and struggling with operations issues.
Change Healthcare, a unit of the largest U.S. health insurer, processes about 50% of all medical claims in the U.S., for around 900,000 doctors, 33,000 pharmacies, 5,500 hospitals and 600 labs. It also runs other support services like call centers.
All were shut temporarily after the Feb. 21 ransomware attack and some, like the medical claims system, took one or two months to restart.
Reuters spoke with five community health centers or systems who said they were still reconciling older unpaid medical claims and tracking down missing payments. Three said they lost customers due to various hack-related disruptions.
"The negative longer term consequences of this huge reimbursement disruption are worse for providers whose profit margin was slim to begin with," said Assistant Professor of Division of Health Policy & Management Hannah Neprash at the University of Minnesota Twin Cities.
"That is rural hospitals, safety net hospitals, and community health centers, any place that treats large shares of publicly insured patients," Neprash said.
A UnitedHealth spokesperson declined to comment on continued reimbursement or call service issues raised by providers. The company's website says restoration of claims services is underway or partly complete.
In May testimony to a U.S. Senate committee on the cyberattack, UnitedHealth CEO Andrew Witty described the hack as causing "incredible disruption" across the healthcare system.
The company had distributed $6.5 billion in loans to providers as of last month. About 34% went to safety net hospitals and community health centers, Witty wrote in his testimony to the committee.
OVERTIME
Employees at Nevada Health Centers' 26 locations have consistently logged over 100 hours of overtime per week filing additional paperwork to correct patient eligibility or wrongly denied claims, according to Executive Vice President of Revenue Cycle and Population Health J.C. Flowers.
The health centers need more labor hours than ever, but may need to cut jobs as they wrestle with delayed cash flow and seek overdue payments from insurers, he said.
“It’s a real fear when you're used to averaging a million dollars a month in revenue, and all of a sudden, for the next eight months, you're going to do $600,000,” said Flowers, who said Nevada Health Centers employs about 150 health professionals.
With insurance claims backlogged for months, paperwork justifying each payment makes up the bulk of the cyberattack's continued burden for providers, according to Terrence Cunningham, a policy director at the American Hospital Association.
In an April physician survey published by the American Medical Association, 91% of respondents said they needed to commit staff to recouping revenue lost to the hack.
“Organizations have to shift money around to deal with the aftermath, and it's going to affect them for the entire fiscal year, at the very least,” said Julia Skapik, chief medical information officer at the National Association of Community Health Centers. Community Health Centers receive $4.4 billion in annual government funding.
IMPATIENT PATIENTS
Some providers said their relationships with patients suffered as a result of disrupted services.
Delaware Valley Community Health, based in Philadelphia, cut ties with a call center that used Change Healthcare technology.
“We've had to use our own employees now to try and answer the phones, and we’ve gotten patients upset with us," said Dr. A. Scott McNeal, Delaware Valley's CEO, adding that longer waits led some to hang up without scheduling appointments.
At LCH Health and Community Services, a Kennett Square, Pennsylvania-based provider, some patients who couldn't easily fill prescriptions blamed the practice and went elsewhere, Chief Executive Ronan Gannon said.
That has exacerbated LCH's revenue crunch, as higher paying privately insured patients left and people without insurance paying lower fees became a bigger percentage, he said.
Novant Health and Community Health Systems (CHS) will be permitted to consummate their contested $320 million hospital deal, though regulatory uncertainty would still follow the deal’s expected close.
Wednesday, U.S. District Judge Kenneth Bell denied the Federal Trade Commission’s (FTC's) bid for a preliminary injunction against the sale of two CHS hospitals in North Carolina: the 123-bed Lake Norman Regional Medical Center and the 146-bed Davis Regional Medical Center.
“Having weighed the equities and considering the [FTC]'s likelihood of ultimate success, the Court concludes that entry of an injunction pending the conclusion of the FTC’s administrative process would not be in the public interest,” Bell wrote in his order.
The health systems had announced their deal back in early 2023, though the FTC only announced its opposition in January and filed for the preliminary injunction in late March.
Filings from both sides—as well as other major stakeholders—had disputed whether the purchases would decrease competition by bolstering the region’s second largest healthcare provider (behind Atrium Health), or maintain “struggling” healthcare facilities likely to face crushing competition amid Atrium Health’s plans to open a new 30-bed hospital nearby.
Bell leaned more toward the latter. In the decision, the judge challenged the FTC’s assertion that the merger would lead to combined market share and market concentration beyond its permitted guidelines. He wrote that the markets in question are already concentrated regardless to the deal, and that instead the court needs to “look beyond the economic numbers” the FTC’s guidelines rely on to make its decision.
Here, the judge wrote that Novant and CHS’ “doomsday characterization” of the hospitals “is mostly inaccurate and certainly exaggerated,” but acknowledged that it appeared unlikely that CHS would spend the money to support the hospitals in the face of growing competition. There is a fair chance that CHS would ultimately opt to close the hospitals without a deal, the judge wrote, an outcome that would reduce healthcare offerings and harm competition.
“Therefore, the proposed merger carries at least as much likelihood of competitive benefits as it does competitive harm and the FTC is unlikely to ultimately be successful in proving that the transaction may ‘substantially lessen competition,’” Bell wrote.
When weighing whether it would be in the public interest to allow the deal to go forward, the judge determined that the risk of losing “critically needed psychiatric medical services” and a prolonged loss of other recently closed service lines outweigh potential harms, such as higher prices or reduced tax revenues from the hospitals’ shift to nonprofit status.
He also acknowledged that “the court believes and accepts” a promise from Novant’s executives not to raise prices at Lake Norman Regional Medical Center for at least three years following the acquisition.
“Having weighed the equities and considering the [FTC]'s likelihood of ultimate success, the Court concludes that entry of an injunction pending the conclusion of the FTC’s administrative process would not be in the public interest.”
Though Novant and CHS have cleared the short-term barrier to their deal, they’re still queued up for an administrative review process (and potential appeal) that could last over two years. An administrative merits hearing before an administrative law judge is scheduled for June 26.
Novant Health reported total operating revenues of $8.3 billion and an operating income of $146.8 million in fiscal 2023. It has 16 medical centers, more than 700 medical group clinics and records 6.7 million annual patient encounters.
Fierce Healthcare has reached out to Novant and CHS for comment on the order. The former has previously said it was committed to fighting the FTC’s block and its “flawed” view of the deal in the courts.
Amgen said on Wednesday its drug helped to reduce the risk of flares in patients with an immune system-related condition, meeting the main goal of a late-stage study.
The drug, Uplizna, was being studied for the treatment of Immunoglobulin G4-related disease (IgG4-RD), which is characterized by periods of remission and unpredictable disease flares.
The condition can affect almost any organ in the body, often involving multiple organs at a time, and can result in irreversible organ damage.
The company said the drug showed a statistically significant 87% reduction in the risk of flares, compared to placebo.
There are currently no therapies approved for the condition, which is usually managed with steroids such as glucocorticoids.
It is estimated to affect one to five patients in 100,000, although the number of IgG4-RD patients is difficult to determine based on limited epidemiology data, the company said.
The late-stage trial, which studied the safety and efficacy of the drug in reducing the risk of flares, enrolled 135 adults with IgG4-RD, who received 300 milligram intravenous dose of the drug or placebo.
Amgen had gained access to the drug through its $27.8 billion acquisition of Horizon Therapeutics, which closed last year, and recorded sales of $80 million from it in the first quarter.
Full data from the trial will be presented at a future medical meeting, Amgen said.
Based on the results, the drugmaker is planning to file for an approval for the condition in the United States.
Approval in IgG4-RD could represent a significant market expansion from Uplizna's only approved indication, said Leerink Partners analyst David Risinger.
Uplizna is currently approved in the U.S., Europe and Canada, among others, for a rare, severe, neuroinflammatory disease called neuromyelitis optica spectrum disorder, which attacks the optic nerve spinal cord and brain stem.
