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    China says foreign trade faces ‘extremely severe’ situation, blames geopolitics for slump

    China’s Commerce Ministry on Wednesday said non-economic factors were growing and interfering with trade.
    “Companies say some countries’ politicization of trade has forced orders and production to move out, damaging the economic interests of both suppliers and buyers,” an official said in Mandarin, via a CNBC translation.
    The ministry also said its head has met with more than 20 visiting executives of foreign companies this year.

    Workers load goods for export onto a crane at a port in Lianyungang, Jiangsu province, China June 7, 2019.

    BEIJING — China’s Commerce Ministry on Wednesday said non-economic factors were growing and interfering with the country’s foreign trade which was facing an “extremely severe” situation in the second half of this year.
    “Some countries’ forceful push for ‘decoupling,’ ‘severing [supply] chains’ and so-called ‘de-risking’ are human-made obstacles blocking normal commerce,” Li Xingqian, the head of the ministry’s external trade department, said in Mandarin, according to a CNBC translation. He was speaking to reporters at a press conference about the ministry’s work in the first half of the year.

    China’s exports, a significant contributor to domestic growth, have plunged in recent months as global growth has slowed.
    On Wednesday, Li noted the overall slowdown. He also said that since trade had risen during the three years of the Covid-19 pandemic, that had set a high base for this year’s figures.

    Li also directly referenced calls for supply chain diversification.
    “Companies say some countries’ politicization of trade has forced orders and production to move out, damaging the economic interests of both suppliers and buyers,” he said. He added the ministry would help businesses to cope with “unreasonable trade restrictions.”
    The ministry did not say anything about its own recently announced export controls, set to take effect Aug. 1 on two key metals.

    The U.S. is using export controls of its own in an effort to limit China’s development of high-end tech. Trade tensions between the U.S. and China have escalated over the last few years, prompting other countries to take action as well.
    China, meanwhile, is looking to retain and attract foreign investment. Apple’s Tim Cook, Tesla’s Elon Musk and many other business leaders have traveled to China since it relaxed its border restrictions this year.
    The Commerce Ministry said Wednesday that its minister, Wang Wentao, has met with more than 20 visiting executives of foreign companies this year. The ministry reiterated its efforts to establish regular roundtables with foreign businesses in China and address operational challenges.
    Among other plans, the ministry said it would make changes to allow foreign investors to increase the size of their strategic investments in listed companies. More

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    UK inflation rate slides to 7.9% in June, below expectations

    Economists polled by Reuters had projected an annual rise in the headline consumer price index of 8.2%, following the hotter-than-expected 8.7% reading of May.
    Core inflation — which excludes volatile energy, food, alcohol and tobacco prices — remained sticky at an annualized 6.9%, but fell from a 31-year high of 7.1% in May.

    Skyline view of the City of London financial district.
    Mike Kemp | In Pictures | Getty Images

    LONDON — U.K. inflation cooled significantly in June, coming in below consensus expectations at 7.9% annually.
    Economists polled by Reuters had projected an annual rise in the headline consumer price index of 8.2%, following May’s hotter-than-expected 8.7% reading, but annualized price rises continue to run well above the Bank of England’s 2% target.

    On a monthly basis, headline CPI increased by 0.1%, below a consensus forecast of 0.4%. Core inflation — which excludes volatile energy, food, alcohol and tobacco prices — remained sticky at an annualized 6.9%, but fell from a 31-year high of 7.1% in May.
    Falling prices for motor fuel made the largest downward contributions to the monthly change in the CPI annual rate, the Office for National Statistics said Wednesday. Food prices rose in June, but by less than in the same period of last year.
    “There were no large offsetting upward contributions to the change in the rate,” the ONS added.
    Sterling slid 0.6% against the dollar on Wednesday, hovering around $1.296 as of 7:50 a.m. London time.
    Chief Secretary to the Treasury John Glen told CNBC on Wednesday that the larger-than-expected decline in the inflation rate was “very encouraging.”

    “But there’s no complacency here in the Treasury,” he added. “We’re working closely in lockstep with the Bank of England as we try to halve it this year and get it down to its long term norm of 2%.”

    The U.K. has endured persistently high inflation that both the government and the Bank of England have warned could become entrenched in the economy, as a cost-of-living crisis and a tight labor market fuel wage price increases.
    Bank of England Governor Andrew Bailey and U.K. Finance Minister Jeremy Hunt told an audience in the City of London earlier this month that high wage settlements were harming their efforts to contain inflation.
    The Organization for Economic Cooperation and Development last month projected that the U.K. will experience the highest level of inflation among all advanced economies this year, with a headline annual rate of 6.9%.
    The Bank of England implemented a bumper 50-basis-point hike to interest rates last month, its 13th consecutive increase, as the Monetary Policy Committee struggles to quash demand and rein in inflation.
    After the U.K. base rate went from 0.1% to 5% over the last 20 months, markets are narrowly pricing in another aggressive half-point hike to 5.5% at the MPC’s August meeting.
    A ‘glimmer of light’
    Although energy and fuel prices are taking headline inflation in the “right direction,” stubbornly high core inflation and food costs mean Wednesday’s print is unlikely to offer any “real relief to struggling households and businesses,” said Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales.
    “June’s decline in inflation should be followed by a hefty fall in July, with lower energy bills – following the reduction in Ofgem’s energy price cap – likely to pull the headline rate below 7%,” Thiru said in a statement.
    He added that core inflation should continue to trend downwards, as the lagged effects of the Bank of England’s monetary policy tightening and the government’s tax increases squeeze demand. He nevertheless warned this will come “at the expense of a notably weaker economy and higher unemployment.”
    “While interest rates will probably rise again in August, focusing too much on current inflation data to set rates can lead to damaging policy mistakes given the long time lag between rate rises and their effect on the wider economy,” Thiru said.

    Marcus Brookes, chief investment officer at Quilter Investors, said that the fall in CPI represented a “glimmer of light,” but “still leaves us wondering once again why the U.K. is such a drastic outlier” among major economies when it comes to inflation.
    “Demand has withstood both inflation and the rise in rates, but cracks are appearing, and as more mortgage holders get exposed to the current rates, the economy is likely to be hit as a result.”
    Brookes noted that this path to a likely recession next year may be necessary in order to get inflation back to target, with the Bank of England raising rates further and with fiscal tightening unlikely, as the government faces an election in 2024.
    “Inflation should begin to come back down to more palatable levels soon, but as we have seen these forecasts are unpredictable,” he added.
    “For investors, this means seeking shelter in quality companies that can navigate this difficult environment, while also considering U.K. fixed income investments, such as gilts, as these look at attractive prices right now as we head into a potentially difficult economic period.” More

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    Stocks making the biggest moves after hours: Interactive Brokers, Western Alliance, Omnicom and more

    Western Alliance Bank’s logo is seen on a smartphone.
    Sopa Images | Lightrocket | Getty Images

    Check out the companies making headlines after hours.
    Interactive Brokers — Interactive Brokers slid 2.6% after the brokerage firm’s second-quarter earnings missed estimates. The firm reported adjusted earnings of $1.32 per share, weaker than consensus estimates of $1.40 per share, according to Refinitiv.

    Carvana — The online auto retailer dropped more than 8% in extended trading. Carvana said Tuesday it will post second-quarter earnings results on Wednesday, moving the date of its report up from August 3.
    Omnicom Group — Shares dropped more than 5% after Omnicom Group reported disappointing revenue. The global marketing company posted second-quarter revenue of $3.61 billion, lower than forecasts of $3.67 billion, according to consensus estimates from FactSet. It narrowly beat earnings expectations, posting adjusted earnings of $1.81 per share, higher than the consensus estimates of $1.80 per share.
    J.B. Hunt Transport Services — J.B. Hunt Transport Services declined 1.1% after posting disappointing results. The transportation and logistics firm reported second-quarter earnings of $1.81 per share on revenue of $3.13 billion. Analysts polled by Refinitiv had expected per-share earnings of $1.92 on revenue of $3.31 billion.
    Western Alliance Bancorp — The regional bank stock declined about 5% after Western Alliance posted second-quarter results. The company reported earnings of $1.96 per share, lower than the consensus estimate of $1.98 per share, according to Refinitiv. Revenue for the quarter came in at $669 million, topping the forecast of $652 million. The bank reported deposits rose in the quarter. More

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    Medicare proposes removing limit on PET scans used to help diagnose Alzheimer’s disease

    Medicare has proposed expanding its coverage of PET scans that are used to help diagnose Alzheimer’s disease.
    The proposal would abolish a nationwide policy that limited the scans to one per lifetime for people participating in clinical trials.
    PET scans are used to detect amyloid protein on the brain that is associated with Alzheimer’s.
    The proposal is a major shift in policy that could make it easier for patients to access new treatments such as Leqembi.

    Jay Reinstein, who suffers from Alzheimer’s, sits on a bed after receiving a PET scan at MedStar Georgetown University Hospital in Washington, DC on June 20, 2023. 
    Michael Robinson Chávez | The Washington Post | Getty Images

    Medicare plans to expand its coverage of PET scans that are used to help diagnose Alzheimer’s disease, a major shift in policy that could make it easier for patients to access new treatments that are entering the U.S. market.
    The proposal would abolish Medicare’s current nationwide policy. Right now, the program for seniors will only cover one PET scan per lifetime for patients participating in clinical trials.

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    The Medicare proposal would allow regional organizations, called Medicare Administrative Contractors, to decide whether to cover the diagnostic tool. These regional contractors make coverage decisions based on whether a services is “reasonable and necessary” for the diagnosis of an illness.
    Chiquita Brooks-LaSure, head of the Centers for Medicare and Medicaid Services, said in a statement Monday that the proposed policy “fulfils CMS’ commitment to allow broader coverage of this diagnostic test.” A final decision could come in 90 days, a CMS spokesperson said.
    PET scans are a crucial diagnostic tool that detect an amyloid protein on the brain that is associated with Alzheimer’s disease. The scans are the most common method to help diagnose patients.
    People on Medicare generally pay 20% of the cost of a PET scan after meeting their deductible. The cost of a single scan would come to about $313 per patient, according to one estimate in a May study published in the medical journal JAMA Internal Medicine.
    Dr. Sean Tunis, former chief medical officer at CMS, said it is possible that the regional contractors could come up with different coverage decisions for PET scans. But these organizations generally work together on major issues and there isn’t reason to think their policies on PET scans would vary widely across the U.S., said Tunis, who is now a consultant at Rubix Health.

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    Medicare coverage of PET scans should make it easier for patients to access new treatments such as Leqembi, which was approved by the Food and Drug Administration earlier this month.
    Medicare has agreed to cover Eisai and Biogen’s Alzheimer’s treatment Leqembi, but it requires patients to be diagnosed with mild cognitive impairment or mild Alzheimer’s disease with documented evidence of amyloid on the brain.
    Most patients opt for PET scans to confirm amyloid presence because the imaging is less invasive than alternative diagnostic tools such as spinal taps. Blood tests are also in development, with some already in limited use, but they have not been broadly rolled out yet.
    Medicare has said it will also cover other Alzheimer’s antibody treatments with the same conditions if they receive approval from the FDA. Eli Lilly expects the FDA to make a decision on its treatment, donanemab, by the end of the year.
    The Alzheimer’s Association, the lobbying group that advocates for people living with the disease, said the new policy proposed by Medicare would remove unnecessary barriers for patients. Maria Carrillo, the association’s chief scientific officer, called the decision a “major step forward.” More

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    Charles Schwab stock pops 12% after second-quarter results beat expectations

    A man passes by a location of financial broker Charles Schwab in New York, March 20, 2023.
    Brendan McDermid | Reuters

    Shares of brokerage firm Charles Schwab rose sharply Tuesday after the company’s second-quarter report topped expectations.
    Schwab generated 75 cents in adjusted earnings per share on $4.66 billion in revenue. Analysts surveyed by Refinitiv estimated 71 cents per share on $4.61 billion of revenue.

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    Shares jumped 12% Tuesday.

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    Shares of Schwab rose sharply on Tuesday.

    Chief Financial Officer Peter Crawford said in the release that revenue, which fell 9% year over year, was hurt by customers reallocating their cash with higher rates. However, Crawford stated that “we observed a continued and substantial deceleration in the daily pace of cash outflows” in June and that the company expected client cash to start growing again by the end of the year.
    CEO Walt Bettinger said on “Squawk on the Street” that “client cash realigning” is now down more than 80% from the first quarter.
    “We were proactive going to clients, encouraging them to move their sweep cash into higher yielding balances, and that process began 15 or 16 months ago. They’ve largely done that,” Bettinger said. “And what’s interesting about June is that even as this cash realigning fell to the lowest level it’s been in many, many months, part of that was because clients are now moving back into the equity markets.”
    Shares of Schwab entered Tuesday down nearly 30% for the year. The stock was hit hard during the regional banking crisis in March, as investors grew concerned about the value of the debt on Schwab’s balance sheet and potential deposit outflows. More

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    Inter Miami owner expects Lionel Messi signing to double revenues and franchise value over the next year

    The Lionel Messi signing is already providing a financial boost to Inter Miami.
    Managing owner Jorge Mas said he expects revenues and his franchise value to double over the next year.
    Messi jerseys and merchandise are experiencing tremendous demand as well by fans.

    Major League Soccer’s hottest new star is already paying off for Inter Miami.
    All-time soccer great Lionel Messi’s arrival is expected to double the club’s revenues over the next 12 months, its managing owner Jorge Mas told CNBC’s “Halftime Report.” The Argentina national and former Barcelona star joined Inter Miami on Monday.

    Mas also said his team’s valuation could reach between $1.3 billion and $1.5 billion in the next year. Forbes’ most recent estimate pegged Miami as MLS’ 11th most valuable team, worth $600 million.
    “When we got into the project of Inter Miami, we really did it wanting to be the premier platform for football in the United States,” Mas said.

    Supporters of Argentinian soccer player Leo Messi gather outside the Inter Miami DRV Pnk Stadium, in Fort Lauderdale, Florida, July 11, 2023.
    Marco Bello | Reuters

    He said the process of bringing Messi to Miami began in 2019, when he and co-owner David Beckham flew to Barcelona to meet with Messi’s father.
    “When does an athlete truly have the opportunity to change the sport, and I think that’s the opportunity that Messi has ahead of himself,” Mas said.
    Mas said he is already seeing a tremendous “Messi effect” in all aspects commercially and in South Florida.

    “It’s the only thing anyone talks about,” he added.
    Messi jerseys are sold out and Adidas is printing them around the clock, Mas said.
    Sports e-commerce platform Fanatics told CNBC that Messi could set a record for the most jerseys sold for a player joining a new team in any sport after 24 hours. Messi sales are on pace with the current first-day jersey sales record set by Cristiano Ronaldo immediately following his move to Manchester United in 2021.

    Ticket prices for Messi’s Friday U.S. debut are averaging nearly $1,300 on secondary ticket platforms such as TicketIQ.
    Mas said he hoped the buzz would help the MLS grow to compete with top-notch European leagues.
    “I think that it’s incumbent upon myself and my partners in Major League Soccer and fellow owners to seize the moment that we have ahead of us to hopefully elevate Major League Soccer over the course of the next three to five years to compete with the Premier League,” Mas said. More

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    Stocks making the biggest moves midday: Morgan Stanley, Bank of America, Charles Schwab and more

    Pedestrians walk by a sign posted outside a Charles Schwab office in San Francisco, April 17, 2023.
    Justin Sullivan | Getty Images

    Check out the companies making headlines in midday trading.
    Morgan Stanley — Shares of the James Gorman-led bank jumped more than 6% after the firm posted second-quarter earnings and revenue that topped analysts’ expectations. The results were helped by Morgan Stanley’s record revenue from wealth management.

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    Bank of America — Bank of America shares rose more than 4% after the company reported second-quarter financial results. Earnings came in at 88 cents a share, although analysts estimated a profit of 84 cents per share, according to a Refinitiv estimate. The bank posted revenue of $25.33 billion fueled by a 14% jump in net interest income amid higher rates. Analysts anticipated revenue of $25.05 billion.
    Charles Schwab — The brokerage stock popped 12.6% after reporting stronger-than-expected results for the second quarter. Charles Schwab reported adjusted earnings of 75 cents per share on $4.66 billion in revenue. Analysts surveyed by Refinitiv had expected EPS of 71 cents on $4.61 billion in revenue.
    Microsoft — Microsoft shares jumped 4%. The software giant announced pricing for its artificial intelligence Copilot tool. Microsoft also announced an expanded partnership with Meta Platforms to make the social media company’s open-source large language model available on Azure and Windows.
    Regional bank stocks — Regional bank stocks gained on Tuesday on the heels of a fresh batch of bank results, lifting the SPDR S&P Regional Banking ETF (KRE) more than 4%. Western Alliance popped more than 8% ahead of earnings after the bell. PacWest was up 5.8%, while FB Financial gained more than 6% and Zions Bancorporation rose 3.4%.
    UnitedHealth — The health-insurance stock gained 3.3% after being upgraded to outperform from market perform by Bernstein. The firm said UnitedHealth is a “best-in-class” managed-care and value-based care company with an attractive valuation and “large runway of growth.”

    Verizon, AT&T — Verizon rose 2.6%, reversing the recent downtrend in shares following a report that linked the companies to lead-encased cables and concerns from analysts. Elsewhere, AT&T lost about 0.6%.
    Bank of New York Mellon — Shares rose more than 4% after Bank of New York Mellon reported second-quarter revenue and profit that beat Wall Street’s expectations.
    Pinterest — Shares hit a high not seen since early 2022 intraday and rose 4%. Evercore ISI said improving advertising trends are creating an inflection point for the stock.
    PNC Financial — Shares gained 2.5% after PNC Financial reported second-quarter earnings that topped Wall Street’s earnings expectations but came in slightly short on revenue. The financial services company reported earnings of $3.36 per share on revenue of $5.29 billion.
    Prologis — The logistics real estate stock lost more than 3% after posting second-quarter results that fell short of Refinitiv revenue estimates. Prologis reported net income of $1.31 a share and rental revenue of $1.65 billion.
    Novartis — U.S.-listed shares of Novartis jumped 4.6%. The Swiss pharmaceutical firm reported second-quarter earnings that topped estimates, according to StreetAccount. Novartis posted core earnings of $1.83 per share, better than the $1.70 estimate. It posted revenue of $13.62 billion, more than the consensus $13.23 billion. The company raised its full-year forecast. Its board of directors also approved a separation from its Sandoz division.
    Masimo — Shares tumbled 20% after Masimo pre-announced second-quarter revenue that was weaker than consensus expectations, and lowered its full-year guidance. The medical-device maker said in its guidance that second-quarter revenue would come in at $453 million to $457 million, lower than expectations of $553.3 million, according to consensus estimates from FactSet. Stifel downgraded the stock to hold from buy after the pre-announcement, according to StreetAccount.
    Lockheed Martin — The aerospace company gave back earlier gains that followed the release of its latest financial update. Lockheed Martin reported earnings of $6.73 that beat expectations of $6.45, according to FactSet, and revenue of $16.69 billion, compared with expectations of $15.92 billion. The stock finished nearly 3% lower.
    — CNBC’s Tanaya Macheel, Sarah Min, Yun Li, Alex Harring and Michelle Fox contributed reporting. More

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    Johnson & Johnson sues Biden administration over Medicare drug price negotiations

    Johnson & Johnson sued the Biden administration over Medicare’s new powers to slash drug prices, making it the third pharmaceutical company to challenge the controversial provision of the Inflation Reduction Act.  
    The lawsuit filed in federal district court in New Jersey argues the Medicare negotiations violate the First and Fifth Amendments of the U.S. Constitution.
    Earlier suits brought separately by Merck and Bristol Myers Squibb, as well as by the U.S. Chamber of Commerce and PhRMA, the pharmaceutical industry’s largest lobbying group, made similar arguments.

    Pavlo Gonchar | LightRocket | Getty Images

    Johnson & Johnson on Tuesday sued the Biden administration over Medicare’s new powers to slash drug prices, making it the third pharmaceutical company to challenge the controversial provision of the Inflation Reduction Act.  
    The lawsuit filed in federal district court in New Jersey argues the Medicare negotiations violate the First and Fifth Amendments of the U.S. Constitution.

    Earlier suits brought separately by drugmakers Merck and Bristol Myers Squibb, as well as by the U.S. Chamber of Commerce and PhRMA, the pharmaceutical industry’s largest lobbying group, made similar arguments.
    J&J’s complaint asks a judge to block the U.S. Health and Human Services Department from compelling the drugmaker to participate in the program.
    The company said its suit aims to stop the “innovation-damaging congressional overreach that threatens the United States’ primacy in developing transformative therapies and in patients’ access to those treatments.”
    President Joe Biden’s Inflation Reduction Act, which passed in 2022 by a narrow party-line vote, empowered Medicare to negotiate drug prices for the first time in the program’s six-decade history. 
    The provision aims to make drugs more affordable for older Americans but will likely reduce pharmaceutical industry profits. 

    The Centers for Medicare and Medicaid Services will publish a list of which drugs were selected for a first cycle of negotiations on Sept. 1, with prices taking effect in 2026. The companies that make those drugs face an October deadline to sign agreements to participate in those negotiations.
    J&J said its patented drug Xarelto, which treats blood clots and reduces the risk of stroke, will be subject to price negotiations in 2023 because it is among the 10 most widely reimbursed drugs for Medicare Part D patients.
    J&J argues that Medicare negotiations “inflict an uncompensated physical taking” of the company’s drug and essentially force J&J to provide access to Xarelto on terms set by the government that the company “would never voluntarily” agree to.
    The company claims this violates Fifth Amendment protections against the government seizing private property without just compensation.
    J&J last year booked $2.47 billion in revenue from Xarelto.
    J&J also argues that the new provision forces the company to agree that the federal government is negotiating fair drug prices. That compels J&J to make “false and misleading statements” in violation of the First Amendment, according to the complaint.
    The company believes the provision doesn’t involve true negotiations since the government “unilaterally dictates” drug prices. 
    Real negotiation involves finding a way for both parties to freely agree on terms, J&J said.
    “While the Government may choose to deceptively describe the Program as involving an ‘agreement’ to ‘negotiate’ a ‘fair’ price, it cannot force manufacturers to echo its misleading messaging,” J&J said in the complaint. 
    HHS said in a statement it will “vigorously defend the President’s drug price negotiation law, which is already helping to lower health care costs for seniors and people with disabilities.”
    “The law is on our side,” the agency added, reiterating previous remarks made by HHS Secretary Xavier Becerra. More