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    Carvana raises 2024 earnings guidance after topping Wall Street’s Q3 expectations

    Carvana raised its 2024 earnings guidance, saying it would be “significantly above the high end” of its previous target.
    The online used-car retailer easily beat Wall Street’s estimates for earnings and revenue.

    A Carvana sign and signature vending machine in Tempe, Arizona.
    Michael Wayland | CNBC

    Carvana on Wednesday raised its 2024 earnings guidance after the online used-car retailer significantly topped Wall Street’s third-quarter expectations.
    Here’s how the company performed in the third quarter, compared with average estimates compiled by LSEG:

    Earnings per share: 64 cents vs. 25 cents expected
    Revenue: $3.65 billion vs. $3.45 billion expected

    The company’s stock rose roughly 20% in after-hours trading Wednesday.
    For 2024 guidance, Carvana said its adjusted earnings before interest, taxes, depreciation and amortization would be “significantly above the high end” of its previous target of $1 billion to $1.2 billion. The company reported $339 million in adjusted EBITDA last year.
    Carvana’s new guidance signals expectations for a strong end of the year. The company said it expects a sequential increase in retail vehicle sales during the fourth quarter compared with the prior three months, which totaled 108,651 vehicles.
    For the third quarter, the company’s net income was $148 million, down from $741 million a year earlier that was inflated by a gain on debt reduction. Adjusted EBITDA was $429 million and adjusted EBITDA margin was 11.7%, both topping company records achieved during the second quarter.
    The company’s third-quarter 2023 results included adjusted EBITDA of $148 million and revenue of $2.77 billion.

    Shares of Carvana are up roughly 300% this year as the company restructured operations and cut costs following Wall Street concerns of bankruptcy for the company in late 2022.
    Carvana stock closed Wednesday at $207.31 per share, down less than 1%. Shares hit a new 52-week high earlier in the day of $213.98 per share.

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    Novo Nordisk’s Ozempic and Wegovy now available in the U.S. after shortages, FDA says

    All doses of Novo Nordisk’s weight loss injection Wegovy and diabetes drug Ozempic are now available in the U.S., according to an update on the FDA’s drug shortage database.
    It is a sign that Novo Nordisk’s efforts to ramp up the supply of those drugs are starting to pay off, as demand continues to skyrocket in the U.S.  
    The update raises the potential of the FDA to remove the blockbuster injections from its shortage list entirely, which could prevent compounding pharmacies from making customized and often cheaper versions of those branded drugs.

    Packages containing syringes of the medications Wegovy, Ozempic and Mounjaro at a shop in Mitte, Germany, July 11, 2024.
    Picture Alliance | Picture Alliance | Getty Images

    All doses of Novo Nordisk’s highly popular weight loss injection Wegovy and diabetes drug Ozempic are now available in the U.S., according to an update on the U.S. Food and Drug Administration’s drug shortage database Wednesday. 
    It is a sign that Novo Nordisk’s efforts to ramp up the supply of those weekly drugs are starting to pay off, as demand continues to skyrocket in the U.S.  

    A previous update said the lowest dose of Wegovy — 25 milligrams — was still in short supply.
    Several doses of semaglutide, the active ingredient in Wegovy and Ozempic, have been on the FDA’s shortage list since early 2022. 
    Wednesday’s update raises the potential that the FDA might remove the blockbuster injections from its shortage list entirely, which could prevent compounding pharmacies from making customized and often cheaper versions of those branded drugs.
    In a statement, Novo Nordisk said all doses of Wegovy and Ozempic are being shipped regularly to wholesalers. The Danish drugmaker said the FDA’s update is a result of the company’s significant investment in expanding manufacturing capacity and “ongoing communication” with the agency. 
    Still, Novo Nordisk said patients may not always be able to immediately fill their prescriptions at a particular pharmacy, even when a medication is listed as available. 

    “Our intentional approach to gradually increase supply into the U.S. market is working,” Novo Nordisk said. “We will continue to prioritize continuity of care for patients, closely monitoring market dynamics and prescribing trends along the way.”
    It comes a week after Novo Nordisk asked the FDA to prevent compounding pharmacies from making unapproved versions of Wegovy and Ozempic, arguing that the medications are too complex for those manufacturers to make safely. 
    Earlier this month, the FDA removed tirzepatide, the active ingredient in Eli Lilly’s weight loss drug Zepbound and diabetes treatment Mounjaro, from its shortage list. But a trade group representing some compounders sued the FDA, which led the agency to say it will reconsider its decision to remove tirzepatide from its shortage list. More

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    Eli Lilly’s Zepbound and Mounjaro are no longer in shortage. Here’s where their sales still disappointed

    Eli Lilly’s blockbuster weight loss drug Zepbound and diabetes treatment Mounjaro posted weaker-than-expected sales for the third quarter, even as both medicines have largely recovered from widespread shortages in the U.S.
    The drugmaker blamed the misses on drug wholesalers cutting inventory of Zepbound and Mounjaro.
    Eli Lilly executives insisted that underlying demand for the medicines remained strong and that the company has enough supply available.

    An Eli Lilly & Co. Zepbound injection pen arranged in the Brooklyn borough of New York, US, on Thursday, March 28, 2024. 
    Shelby Knowles | Bloomberg | Getty Images

    Eli Lilly’s blockbuster weight loss drug Zepbound and diabetes treatment Mounjaro posted weaker-than-expected sales for the third quarter, even as supply of both medicines has largely recovered from widespread shortages in the U.S. 
    The reason for the disappointing sales, according to the company, is not an issue of demand or supply. 

    During an earnings call Wednesday, Eli Lilly instead blamed it on drug wholesalers cutting inventory of Zepbound and Mounjaro. Wholesalers purchase medicines from manufacturers and sell them to hospitals, clinics, pharmacies and other health-care providers.
    Supply increases allowed Eli Lilly to fulfill back orders for wholesalers in the second quarter, which led to increased inventory of Zepbound and Mounjaro during the period, according to the pharmaceutical giant.
    But those wholesalers tapped into some of that existing stock in the third quarter instead of buying more from the company, which dampened revenue from both treatments, Eli Lilly said. 
    Mounjaro’s third-quarter sales of $3.11 billion fell well short of the $3.7 billion analysts had expected, according to estimates compiled by StreetAccount. Sales of Zepbound were $1.26 billion in the quarter, missing the $1.76 billion expected by analysts. 
    “The primary culprit was an inventory hit to Mounjaro and Zepbound … not weaker demand,” Citi analyst Geoff Meacham wrote in a research note Wednesday. 

    Jared Holz, Mizuho health-care equity strategist, wrote in an email that “destocking” — or selling existing inventory for the drugs rather than stocking up on more — came as a surprise, especially with the high level of demand for the treatments.
    But he said Eli Lilly has invested $10 billion to $15 billion to expand manufacturing capacity for its injectable drugs in this year alone, which should “help to reverse some of the trends reported in this period.”
    Still, some analysts question whether the inventory issue can explain all of what happened with the sales of Zepbound and Mounjaro in the third quarter. That factor likely explains “only a fraction,” or around 20%, of the drugs’ revenue misses, Barclays analyst Carter Gould wrote in a note Wednesday. 
    Demand for weight loss and diabetes injections has outpaced supply over the past two years. 
    But Eli Lilly’s supply woes began to ease earlier this year, and the Food and Drug Administration removed tirzepatide, the active ingredient in Mounjaro and Zepbound, from its shortage list.
    Earlier this month, a trade group representing compounding pharmacies, which make customized and often cheaper alternatives to branded drugs in shortage, sued the FDA. The group said tirzepatide is still in short supply and should therefore remain on the shortage list, which led the agency to reconsider its decision.
    On the earnings call, Eli Lilly executives insisted that underlying demand for the medicines remained strong. 
    “Is there a demand problem? No,” Eli Lilly CEO Dave Ricks said, pointing instead to “a lot of lumpiness in channel stocking.”
    “I think what we really don’t control and don’t attempt to but as a reality is that downstream customers from Lilly, wholesalers and retailers, are making their own decisions about which of the 12 different dosage forms they want to stock in at what level,” Ricks said. 
    He noted that wholesalers are dealing with some limitations, including financial pressures. They also have to deal with “cold chain” capacity constraints, or maintain a temperature-controlled supply chain that ensures the quality of the drugs from production to delivery. 
    Ricks said Eli Lilly had yet to begin what the company calls “demand-stimulating activities,” or advertising and promoting, for Zepbound. The drugmaker will start those efforts in November, he said.
    That will include providing drug samples to health-care providers. 
    Eli Lilly is also investing heavily in its direct-to-consumer website, which offers telehealth prescriptions and direct home delivery of certain drugs to expand patient access, executives said during the call. 
    Ricks dismissed the idea that the disappointing sales in the quarter was due to competition from compounded versions of Mounjaro and Zepbound. 
    “We don’t really see a financial impact on Lilly of compounding,” Ricks said. More

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    Will bond vigilantes come for America’s next president?

    With less than a week left before America’s presidential and congressional elections, market participants are abuzz with discussion of what the various results might mean for everything from trade and defence to tax and regulation. But the Treasury market, which ultimately underpins much of global finance, is of particular interest. More

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    United Airlines raises spending requirements to earn frequent flyer status

    United Airlines customers will have to spend and fly more to earn frequent flyer status next year.
    Airlines have repeatedly increased the requirements to earn elite benefits as travel demand returned post-pandemic.

    A United Airlines Boeing 757 departs from Los Angeles International Airport en route to New York on Sept. 19, 2024.
    Kevin Carter | Getty Images

    United Airlines customers will have to spend more to reach frequent flyer status next year, the latest move by the carrier to increase profits and give an exclusive feel to the increasingly crowded top ranks of airline loyalty programs.
    The thresholds to earn elite status in the airline’s MileagePlus program are going up about 25% and include either spending on a co-branded card or a combination of spending and flying. The status earning requirements and accompanying perks earned next year will be valid in 2026.

    United, American Airlines, Delta Air Lines and other carriers have spent years changing their loyalty programs to reward travelers more based on how much they spend rather than how far they fly. Co-branded credit cards are a crucial business for airline profits, as banks pay carriers when consumers swipe those cards.
    Elite status comes with perks like free upgrades (when available), earlier boarding, better seat selection and access to extra legroom options. Airlines have grappled with increasing numbers of high-spending customers, which have led to crowded lounges and swarms of travelers in early boarding groups.
    The lowest level status, Silver Premier in 2025 will require customers to earn 5,000 premier qualifying points, or PQP, and fly 15 qualifying flights, up from 4,000 premier qualifying points and 12 qualifying flights.
    Travelers earn one PQPs for every $1 they spend on United and other qualifying flights.
    Earning Silver status only by spending — meaning getting to that status without the qualifying flights — will go for 6,000 points, up from 5,000. That would mean customers could spend $6,000 on United flights up from $5,000, regardless of the number of flights they take. Customers will also earn 1 PQP for every $20 they spend on co-branded cards, though some of the options in its credit card portfolio will offer 1 PQP for every $15 spent.

    Here are the changes:

    Silver status: 5,000 PQPs and 15 Premier qualifying flights, or simply 6,000 Premiere qualifying points alone. (Up from 4,000 PQPs and 12 PQFs, or 5,000 PQPs alone.)
    Gold status: 10,000 PQPs and 30 PQFs, or 12,000 PQPs. (Up from 8,000 PQPs and 24 PQFs or 10,000 PQPs alone.)
    Platinum status: 15,000 PQPs and 45 PQFs, or 18,000 PQPs. (Up from 12,000 PQPs and 36 PQFs, 15,000 PQPs alone.)
    1K: 22,000 PQPs and 60 PQFs or 28,000 PQPs. (Up from 18,000 PQPs and 54 PQFs or 24,000 PQPs.)

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    Donald Trump would leave Asia with only bad options

    At the 39th ASEAN Roundtable, hosted by a research institute in Singapore on October 28th, the room was split. With Asia riven by an assertive China and a protectionist America, some attendees called for hard-headed thinking about trade-offs. Choices will have to be made; allegiances declared, they warned. A Donald Trump victory might, after all, bring brutal tariffs. More

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    Sigh of relief for UK tech founders as Labour hikes capital gains tax by less than feared

    Finance Minister Rachel Reeves on Wednesday hiked capital gains tax (CGT) and increased the rate of tax applied to an entrepreneurs’ relief scheme as part of her far-reaching budget announcement.
    Reeves’ plans had caused angst among tech founders in the country, with British tech lobby group Startup Coalition previously warning the government’s tax plans could result in a tech “brain drain.”
    One tech founder who last week threatened to move to the U.S. over the anticipated tax changes, told CNBC that Wednesday’s announcement was “better than I thought it would be.”

    On Monday, British tech lobby group Startup Coalition warned in a blog post that there was a risk Reeves’ tax plans could result in a tech “brain drain.”. (Photo by Oli Scarff/Getty Images)
    Oli Scarff | Getty Images

    LONDON — Britain’s Labour government on Wednesday announced plans to raise the rate of capital gains tax on share sales, news that offered some relief for technology entrepreneurs who feared a more intense tax raid on the wealthy.
    Finance Minister Rachel Reeves on Wednesday hiked capital gains tax (CGT) — a levy on the profit investors make from the sale of an investment — as part of her far-reaching budget announcement. The lower capital gains tax rate will be increased to 18% from 10%, while the higher rate will climb to 24% from 20%, Reeves said. The tax hikes are expected to bring in £2.5 billion.

    “We need to drive growth, promote entrepreneurship and support wealth creation, while raising the revenue required to fund our public services and restore our public finances,” Reeves said, adding that, even with the higher rate, the U.K. would “still have the lowest capital-gains tax rate of any European G7 economy.”
    Reeves maintained the £1 million lifetime limit on capital gains from the sale of all or part of a company under business asset disposal relief (BADR), quashing fears from entrepreneurs that the tax relief scheme for entrepreneurs would be scrapped.
    However, she added that the rate of CGT applied to entrepreneurs selling all or part of their business under BADR will be increased to 14% in 2025 and 18% a year later. She stressed that this still represented a “significant gap compared to the higher rate of capital gains tax.”
    In a less welcome move for businesses, Reeves also announced plans to increase the rate of National Insurance (NI) — a tax on earnings — for employers. The current rate is 13.8% on a worker’s earnings above £9,100 per year. This is set to rise to 15% on salaries above £5,000 a year.
    The changes form only a small part of sweeping fiscal changes the recently-elected Labour government laid out in its debut budget Wednesday in an attempt to close a multibillion-pound funding gap in public finances.

    ‘Brain drain’ feared

    Reeves’ announcement comes after speculation over capital gains tax changes caused a backlash from tech founders and investors. Even prior to Reeves’ announcement, the anticipation that CGT would increase had caused angst for tech founders across the country.
    On Monday, British tech lobby group Startup Coalition warned in a blog post that there was a risk Reeves’ tax plans could result in a tech “brain drain.”
    A survey of 713 founders and investors conducted by Startup Coalition with private company database Beauhurst, showed that 89% of those polled would consider moving themselves or their business abroad, with 72% having already explored this possibility.
    The survey data also showed that 94% of founders would consider starting a future company outside of the U.K. if the government were to raise the CGT rate.
    Dom Hallas, executive director of Startup Coalition, said that while the survey findings were grim, he doesn’t expect founders will “flee if things get hard” as they “aren’t naive about the role of taxes in society.”
    Following Reeves’ budget speech, Hallas told CNBC via text message that, “Any budget with increases to CGT and NI, gradual increases to BADR and taxes on investors going up, is never easy and today will be hard for founders seeing taxes on their businesses rise.”
    However, he added: “We appreciate that the Government has listened to ensure that entrepreneurs’ biggest fears have not materialised and some balance has been struck including maintaining all important R&D [research and development] investment.”

    Barney Hussey-Yeo, CEO and co-founder of financial technology app Cleo, told CNBC last week he was considering a move to the U.S. as a result of Labour’s tax plans.
    “There’s so many founders already leaving, or already considering leaving — and they’re excited to go to Silicon Valley,” Hussey-Yeo told CNBC on the sidelines of venture capital firm Accel’s EMEA Fintech Summit in London last week.
    Hussey-Yeo didn’t respond to a request for comment Wednesday on whether he still plans to move abroad. However, he told CNBC that the budget announcement was “better than I thought it would be,” adding it “seems like they listened” to entrepreneurs.
    Paul Taylor, CEO of London-headquartered fintech firm Thought Machine, said that though it was reassuring to see the government listening to founder concerns, increases to NI contributions would prove costly. Thought Machine’s U.K. payroll spend is expected to spike by £800,000 as a result.
    “This is a significant amount for companies like us, which rely on investor capital and already face cost pressures and targets,” Taylor told CNBC Wednesday. “Nearly all emerging tech businesses run on investor capital, and this increase sets them back on their path to profitability.”

    Focus on growth-oriented policy

    Tech entrepreneurs and investors are urging the government to return to its focus on fostering growth and innovation in the U.K., messages which were key to Labour’s election manifesto prior to the landslide win that saw Keir Starmer become prime minister.
    “We’re already seeing early-stage firms in the UK struggle securing pre-seed and seed funding, with VCs here having a lower risk appetite. A higher CGT will act as a further deterrent,” Phil Kwok, co-founder of EasyA, an e-learning startup, told CNBC via email.
    “With all the factors at play, we could see investors and the next generation of founders looking to another markets like the U.S.,” he added.
    Hannah Seal, a partner at Index Ventures, told CNBC that the government should “pursue reforms that make it easier for startups to attract talent through employee ownership and ensure all regulators prioritise innovation and growth.”
    “Startup-friendly policies like these will be essential to signal the U.K.’s commitment to remaining a globally competitive hub for innovation, especially in light of today’s announcements,” she added.
    Edgar Randall, managing director of U.K. and Ireland at data and analytics firm Dun & Bradstreet, told CNBC that in order to remain competitive, the government should “weigh the cumulative effect of policies impacting growth.”
    These include policies impacting energy costs, employer National Insurance contributions, and tax structures on capital gains and dividends.
    Ultimately, “business decisions are influenced on more than just fiscal policy,” Randall said, adding that. ‘entrepreneurs look at the ecosystems [as] a whole.” More

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    Pending home sales took an unexpected leap higher last month, but rates have climbed back up

    Pending sales were at the highest level since March and 2.6% higher than September of last year.
    The average rate on the 30-year fixed mortgage was coming down all through August and touched its most recent low of 6.11% on Sept.11.
    Regionally pending sales were higher year over year in the Northeast and West and flat in the Midwest and South.

    Signed contracts to buy existing homes in September jumped a surprising 7.4% compared with August, according to the National Association of Realtors. Analysts had been expecting about a 1% gain.
    These so-called pending sales were at the highest level since March and 2.6% higher than September of last year.

    Since pending sales are based on signed contracts, representing people out shopping during the month, it is the most current indicator of buyer demand. It also shows just how sensitive today’s buyers are to mortgage rates.
    The average rate on the 30-year fixed mortgage was coming down all through August and touched its most recent low of 6.11% on Sept. 11, according to Mortgage News Daily. It stayed around that level for the rest of the month before shooting higher in October. It is now just over 7%.
    “Contract signings rose across all regions of the country as buyers took advantage of the combination of lower mortgage rates in late summer and more inventory choices,” said Lawrence Yun, chief economist for the Realtors, in a release. “Further gains are expected if the economy continues to add jobs, inventory levels grow, and mortgage rates hold steady.”
    Regionally pending sales were higher year over year in the Northeast and West and flat in the Midwest and South. Overall, the gains were biggest in the West, where home prices are the highest and buyers would benefit most from even a small drop in rates.
    With rates now higher, affordability is taking a hit once again. Mortgage demand from homebuyers, however, still saw gains last week and was 10% higher compared with the same week one year ago, according to the Mortgage Bankers Association. The levels of mortgage demand are still historically low, and sales, while higher, are as well.
    “With rates pushing back to 7%, the rebound in pending activity is likely short lived and is unlikely to be enough to help 2024 home sales exceed 2023 levels,” said Selma Hepp, chief economist at CoreLogic.

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