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    Fed officials were divided on whether to cut rates by half a point in September, minutes show

    Federal Reserve officials at their September meeting agreed to cut interest rates but were unsure how aggressive to get.
    Minutes released Wednesday indicated that “a substantial majority of participants” favored cutting by half a percentage point, through some expressed misgivings about going that large.
    Since the meeting, economic indicators have showed that the labor market is perhaps stronger than officials favoring the 50 basis point move had expected.

    WASHINGTON – Federal Reserve officials at their September meeting agreed to cut interest rates but were unsure how aggressive to get, ultimately deciding on a half percentage point move in an effort to balance confidence on inflation with worries over the labor market, according to minutes released Wednesday.
    The meeting summary detailed reasons that policymakers decided to approve a jumbo rate cut of 50 basis points for the first time in more than four years, and showed members divided over the economic outlook.

    Some officials hoped for a smaller, quarter percentage point reduction as they sought assurance that inflation was moving sustainably lower and were less worried about the jobs picture.
    Ultimately, only one Federal Open Market Committee member, Governor Michelle Bowman, voted against the half-point cut, saying she would have preferred a quarter point. But the minutes indicated that others also favored a smaller move. It was the first time a governor had dissented on an interest rate vote since 2005 for a Fed known for its unity on monetary policy.
    “Some participants observed that they would have preferred a 25 basis point reduction of the target range at this meeting, and a few others indicated that they could have supported such a decision,” the minutes stated.
    “Several participants noted that a 25 basis point reduction would be in line with a gradual path of policy normalization that would allow policymakers time to assess the degree of policy restrictiveness as the economy evolved,” the document added. “A few participants also added that a 25 basis point move could signal a more predictable path of policy normalization.”
    Markets moved little following the release, with major averages continuing on pace for big gains.

    Since the meeting, economic indicators have showed that the labor market is perhaps stronger than officials favoring the 50 basis point move had expected.
    In September, nonfarm payrolls increased by 254,000, much more than expected, while the unemployment rate dipped to 4.1%.
    The data has helped cement expectations that while the Fed likely is in the early days of an easing cycle, future cuts likely would not be as aggressive as the September move. Chair Jerome Powell and other Fed officials in recent days have backed the expected 50 basis points in reductions by the end of 2024 as indicated by the “dot plot” unofficial forecast released after the September meeting.
    The minutes noted that the vote to approve the 50 basis point cut came “in light of the progress on inflation and the balance of risks” against the labor market. The minutes noted that “a substantial majority of participants” favored the larger move, without specifying how many were opposed. The term “participants” suggests involvement of the full FOMC rather than just the 12 voters.
    The minutes also noted that some members favored a reduction at the July meeting that never materialized.
    Though the document was more detailed about the debate over whether to approve the 25 basis point cut, there was not as much information about why voters supported the larger move.
    At his post-meeting news conference, Powell used the term “recalibration” to sum up the decision to cut, and the term also appears in the minutes.
    “Participants emphasized that it was important to communicate that the recalibration of the stance of policy at this meeting should not be interpreted as evidence of a less favorable economic outlook or as a signal that the pace of policy easing would be more rapid than participants’ assessments of the appropriate path,” the minutes stated.
    Such a recalibration would bring policy “into better alignment with recent indicators of inflation and the labor market.” Supporters of the 50 basis point cut “also emphasized that such a move would help sustain the strength in the economy and the labor market while continuing to promote progress on inflation, and would reflect the balance of risks.”
    Under normal circumstances, the Fed prefers to cut in quarter-point increments. Previously, the central bank moved by half a point only during Covid and, before that, the 2008 financial crisis.
    Market pricing is pointing to the fed funds rate ending 2025 in the 3.25%-3.5% range, about in line with the median projection of a 3.4% rate, according to the CME Group’s FedWatch. Futures markets previously had been indicating a more aggressive path and in fact now are pricing in about a 1-in-5 chance that the Fed does not cut at its Nov. 6-7 meeting.
    The bond market, though, has been acting differently. Since the Fed meeting, both the 10- and 2-year Treasury yields have surged about 40 basis points.

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    CVS, UnitedHealth, Cigna say FTC should take Lina Khan and two commissioners off drug middlemen case

    CVS Health, Cigna and UnitedHealth Group are demanding that FTC Chairwoman Lina Khan and two other commissioners recuse themselves from a lawsuit accusing the company and other drug middlemen of boosting their profits while inflating insulin costs for Americans. 
    The companies argued that all three commissioners have an extensive track record of making public statements that indicate “serious bias” against the companies’ so-called pharmacy benefit managers.
    The FTC filed the suit last month against the three largest PBMs, CVS Health’s Caremark, UnitedHealth Group’s Optum Rx and Cigna’s Express Scripts.

    FTC Chairwoman Lina Khan testifies during the House Appropriations Subcommittee on Financial Services and General Government hearing titled “Fiscal Year 2025 Request for the Federal Trade Commission,” in Rayburn Building on Wednesday, May 15, 2024. 
    Tom Williams | Cq-roll Call, Inc. | Getty Images

    CVS Health, UnitedHealth Group and Cigna are demanding Federal Trade Commission Chair Lina Khan and two other commissioners recuse themselves from a suit accusing the companies and other drug middlemen of boosting their profits while inflating insulin costs for Americans. 
    In separate motions filed Tuesday night with the FTC, the companies argued that all three commissioners have an extensive track record of making public statements that indicate allegedly serious bias against the companies’ so-called pharmacy benefit managers. 

    The companies accused Khan, as well as Commissioners Alvaro Bedoya and Rebecca Kelly Slaughter, of incorrectly asserting that PBMs are “price gougers” that hold significant control over the pricing and access to drugs like insulin. CVS said those statements demonstrate that the commissioners have “prejudged this matter,” so their participation in the case “violates due process.” 
    “If the opposite of ‘complete fairness’ is ‘blatant bias,’ the Three Commissioners would easily satisfy even that standard,” CVS wrote in a 23-page motion.
    Meanwhile, UnitedHealth’s 17-page motion said, “Any judge who made these remarks about a litigant at the outset of a lawsuit would immediately need to recuse for blatant bias.”
    Cigna, in one of three motions filed, said Khan has “prejudged the facts and law relating to this action.”
    “She has repeatedly and wrongly asserted that PBMs ‘control’ drug pricing and patient access to drugs,” Cigna said.

    The FTC filed its complaint through its so-called administrative process, which initiates a proceeding before an administrative judge at the agency who would hear the case and issue an opinion. FTC commissioners then vote on that opinion.
    The FTC on Wednesday declined CNBC’s request for comment on the motion. 

    More CNBC health coverage

    Other corporate giants, including Amazon and Meta, have unsuccessfully pushed for Khan to be disqualified from previous cases or investigations, citing concerns about her objectivity. Khan has resisted those calls, saying she has never prejudged any case or set of facts. 
    The FTC filed the suit last month against the three largest PBMs, CVS Health’s Caremark, UnitedHealth Group’s Optum Rx and Cigna’s Express Scripts. All are owned by or connected to health insurers and collectively administer about 80% of the nation’s prescriptions, according to the FTC. 
    PBMs sit at the center of the drug supply chain in the U.S., negotiating medication rebates with manufacturers on behalf of insurers, creating lists of preferred medications covered by health plans and reimbursing pharmacies for prescriptions. The FTC has been investigating PBMs and their role in insulin prices since 2022.
    The agency’s lawsuit argues that the three PBMs have created a “perverse” system that prioritizes high rebates from manufacturers, which leads to “artificially inflated insulin list prices.” The suit also alleges that PBMs favor high-list-price insulins even when insulins with lower list prices become available. 
    The lawsuit also includes each PBM’s affiliated group purchasing organization, or GPO, which brokers drug purchases for hospitals and other health-care providers. Zinc Health Services operates as the GPO for Caremark, while Emisar Pharma acts as the GPO for OptumRx. Ascent Health Services is the GPO for Cigna.
    The lawsuit is just one of several headwinds CVS is facing. Shares of the company are down more than 20% this year as it grapples with runaway medical costs in its insurance segment and pharmacy reimbursement pressure. 
    CVS has engaged advisors in a strategic review of its business, which could potentially involve splitting the company’s insurer from its retail pharmacies. It’s unclear where Caremark would fall in the case of a breakup. 

    A general view shows a sign of CVS Health Customer Support Center in CVS headquarters of CVS Health Corp in Woonsocket, Rhode Island, U.S. October 30, 2023. 
    Faith Ninivaggi | Reuters

    In the motion Tuesday, CVS alleged that Khan has vilified PBMs during her entire professional career. For example, the company cited a 2022 statement in which Khan said PBMs “practically determine which medicines are prescribed, which pharmacies patients can use, and the amount patients will pay at the pharmacy counter.”
    CVS similarly pointed to Slaughter’s previous comments about the allegedly “disturbing,” “unacceptable” and “rotten” rebating practices of PBMs, and how she believes they create “competitive distortions in pharmaceutical markets.” Meanwhile, the company cited Bedoya’s suggestions that “a significant part of the blame” for insulin price increases rests on rebates demanded by PBMs. 
    CVS called the prior statements of the three commissioners “incorrect assertions” about Caremark and other PBMs. 
    The health-care giant also alleged that during the FTC probe, the three commissioners attended closed events to help fundraise for anti-PBM lobbying groups. Organizers of those events vilified PBMs as “bloodsuckers” and “vampires,” CVS argued in the motion.
    The Biden administration and lawmakers on both sides of the aisle have escalated pressure on PBMs, seeking to increase transparency into their business practices as many patients struggle to afford prescription drugs. Americans pay two to three times more than patients in other developed nations for prescription drugs on average, according to a fact sheet from the White House.

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    Bridgit Mendler’s space startup Northwood passes first test, connecting prototype antenna to Planet satellites

    Northwood Space, the startup led by former television star and singer Bridgit Mendler, passed its first major development test by connecting with Planet imagery satellites in orbit.
    “We’re building this global network to send data for satellites, built off of phased array technology that we have now successfully validated, both in the lab and in the field,” Mendler told CNBC.

    The startup’s co-founders, from left: Chief Technology Officer Griffin Cleverly, CEO Bridgit Mendler and Head of Software Shaurya Luthra.
    Northwood Space

    Northwood Space, the startup led by former television star and singer Bridgit Mendler, passed its first major development test last week by connecting with Planet Labs imagery satellites in orbit.
    “We’re building this global network to send data for satellites, built off of phased array technology that we have now successfully validated, both in the lab and in the field,” Mendler, Northwood’s CEO, told CNBC.

    El Segundo, California-based Northwood, unveiled earlier this year, is focused on the ground side of the space connectivity equation. Ground stations are the vital link for transmitting data to and from orbit and are especially crucial for operating and controlling satellites.

    The company’s prototype antenna “Frankie” during testing in North Dakota on Oct. 5, 2024.
    Northwood Space

    The startup is developing ground stations to be mass-produced and betting that its phased array-based system, called Portal, can outperform the parabolic dish antennas traditionally used by ground station companies. It’s projecting Portal will be able to connect to as many as 10 satellites at once versus the typical one to three for parabolic dish antennas.
    “For Northwood, what we’re wanting to do is introduce a new standard for connectivity for companies,” Mendler said.

    Read more CNBC space news

    The ground station as a service, or GSaaS, market has companies going after the opportunity in managing the Earth-based side of space infrastructure. Along those lines, Amazon has launched its AWS Ground Station service, and satellite communications giant Eutelsat has proposed a nearly $1 billion deal in the sector.
    Mendler’s Northwood wants to take GSaaS a step further, eliminating what she sees as “connectivity very much stuck in a different era” of blackouts and “super expensive networks.”

    “Analogizing to the cellular industry — where we draw parallels to how cell towers and shared assets like that ultimately have super vertically integrated players — wound up offloading and selling their assets to the tower companies. We expected that the shared model is going to be an efficiency,” Mendler said.
    In her view, ground stations are “the third leg of the stool” of space technology, with the other two being rockets, or the cargo vehicles, and satellites, or the orbital infrastructure.
    “The industry is really at a point where there’s a lot of appetite for growth, and this is something that we can really interject into the industry and accelerate progress,” Mendler said.

    North Dakota testing

    Setting up the company’s prototype antenna in the early hours of Oct. 2, 2024.
    Northwood Space

    Last week the Northwood team was out in remote Maddock, North Dakota, to test its prototype antenna — “fondly dubbed Frankie,” Mendler noted — by connecting to a Planet satellite in orbit. 
    The effort is known as a TT&C — telemetry, tracking and control — test, with Northwood aiming to make contact with Planet’s satellite in both S-band and X-band frequencies. 
    “We were able to achieve bi-directional communications for the full duration of a pass with Planet’s satellites and achieved nominal communications for them. They were able to perform their operations as they would on their own system,” Mendler said.

    Testing the prototype on Oct. 5, 2024.
    Northwood Space

    Northwood designed and built Frankie in four months, the company said, and was able to deploy the antenna “from off the truck to live sky testing” in six hours. Planet, with more than 150 imagery satellites in orbit, heralded Northwood’s test as a “major milestone.”
    “Northwood is not only solving for historical issues like cost and scale, but has built and successfully field-tested their phased array antenna faster than previously thought possible. We’re proud to be a part of this breakthrough in ground station technology,” Joseph Breu, Planet’s senior director of global ground networks, said in a statement to CNBC.

    A rendering of a Portal site.
    Northwood Space

    Northwood has designed two antennas for its Portal system, with a larger 5-by-5-feet S-band frequency antenna and a smaller 18-by-18-inch X-band antenna.
    The company plans to deploy Portal sites that can support as many as 10 simultaneous satellite connections, with data rates over 1 gigabit per second per beam, beginning next year. Northwood is currently assessing locations in the U.S., Europe, Australia and New Zealand for its first Portal sites.
    “Performance-wise, we achieved everything we were hoping to achieve,” Mendler said, adding that Northwood is “really grateful for [Planet’s] participation and support throughout the test.”
    “It just unlocks a lot of things about the next chapter,” Mendler said. More

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    Here’s what investors need to know after GM’s capital markets day

    GM used its Investor Day to try to prove it’s in a unique position to outperform the industry and Wall Street’s expectations with its all-electric vehicles and traditional internal combustion engine vehicles.
    CEO Mary Barra said the company will focus on scale, capital efficiency and cost discipline.
    Several Wall Street analysts were unchanged in their opinion and ratings of the automaker after the event, citing continued optimism but a lack of details in its overall strategy.

    The GM logo is seen on the facade of the General Motors headquarters in Detroit on March 16, 2021.
    Rebecca Cook | Reuters

    DETROIT — Wall Street reacted to General Motors’ investor day on Tuesday with a shrug.
    Executives used the Detroit automaker’s event to focus on broad, near-term updates to the company’s operations in an attempt to separate itself from its competitors amid more challenging market and economic conditions. But it did little to move the company’s stock.

    GM believes it is in a unique position to outperform the industry and Wall Street’s expectations with its all-electric vehicles and traditional internal combustion engine vehicles. The company expects to improve profits for both types of vehicles as it targets adjusted earnings next year to be similar to 2024.
    “It all starts there: scale, capital efficiency and cost discipline. These will differentiate us from others in our industry, and frankly, from our own past performance,” GM CEO Mary Barra said during the roughly three-hour event from its manufacturing operations in Spring Hill, Tennessee.
    GM President Mark Reuss even took jabs at its traditional crosstown rivals Ford Motor and Stellantis. Without naming them, he said GM doesn’t need a “skunkworks” team to develop affordable EVs like Ford and that cutting to profitability, like Stellantis appears to be doing, doesn’t work.
    Nonetheless, investors have largely failed to reward GM for being ahead of the curve for domestic EV production as well as outperforming many automakers in the profitability of its traditional gas- and diesel-powered vehicles.
    Several Wall Street analysts were unchanged in their opinion and ratings of the automaker after the event, citing continued optimism but a lack of details in its overall strategy.

    Stock chart icon

    Shares of GM, Ford and Stellantis in 2024

    “A missed opportunity — no strategy, just tactics. GM’s investor day showcased many of the company’s current achievements, but did not provide much insight on strategy,” Bernstein analyst Daniel Roeska wrote Wednesday in an investor note.
    Others such as Barclays’ Dan Levy and BofA Securities’ John Murphy said while the event lacked some details, it fortified GM’s positioning compared to competitors.
    “GM’s Investor Day yesterday didn’t provide much in the way of sharp shifts in strategy. However, we believe it served as a strong reminder of GM’s balanced and pragmatic approach — a thoughtful combination of ramping on EVs alongside a keen focus on execution and cost while continuing to generate robust shareholder returns,” Levy wrote in a Wednesday investor note.
    Shares of GM closed Tuesday essentially unchanged at $46.01. The stock remains up nearly 30% this year, but it has been under pressure of late due to several downgrades and price target adjustments by Wall Street analysts.
    Here are several topics investors should know from the event:

    2025

    GM expects its 2025 adjusted earnings to be in a “similar range” to the company’s results this year, CFO Paul Jacobson said.
    Its targeted adjusted earnings before interest and taxes for 2024 were between $13 billion and $15 billion, or $9.50 and $10.50 per share, up from previous guidance of $12.5 billion to $14.5 billion, or $9 to $10 per share, earlier this year.
    Through the first half of 2024, GM earned $8.3 billion in EBIT-adjusted and generated $6.4 billion in adjusted automotive free cash flow.
    Jacobson said GM’s capital spend also is expected to be consistent in 2025 with this year. GM’s 2024 financial guidance includes anticipated capital spending of between $10.5 billion and $11.5 billion.

    Peak EV losses?

    Jacobson said GM’s earnings next year are also expected show narrower losses for electric vehicles — projecting they’ll decline by $2 billion to $4 billion.
    The EV tailwinds next year for GM are split between savings from increases in volume and emissions and EV production credits, as well as lower costs, including for raw materials and battery production.

    “We believe our EV losses peaked this year, and we’re focused on significantly improving profitability next year,” Barra said.
    GM said it has lowered its battery costs by $60 per kilowatt hour this year from 2023. It expects to cut another $30 per kilowatt hour next year.
    Barra said the automaker is on pace to produce and wholesale about 200,000 EVs for North America in 2024, achieving profitability on a production, or contribution-margin basis, by the end of this year. That guidance is down from a prior target of 200,00 to 250,000 EVs, which had been lowered from as high as 300,000 units.

    Ultium

    Ultium, which GM once touted as the ultimate solution for EVs, is ultimately dead.
    GM will drop the “Ultium” name for its electric vehicle batteries and supporting technologies after spending years promoting the brand as it rethinks its EV and battery operations.
    The company said the batteries and the technologies will remain, but the name will be gone, except in production operations such as its “Ultium Cells” joint venture plants with LG Energy Solution.
    Instead, GM plans to use a variety of battery chemistries and cell designs, said Kurt Kelty, a former Tesla executive who joined GM as vice president of battery earlier this year.
    “GM is evolving to a multifaceted approach,” he said. “This should only help GM strengthen our position of producing more EV models than any other automaker.”

    ICE costs, profits

    GM also expects to continue growing its sales and profits of traditional vehicles with internal combustion engines, or ICE, in the years to come.
    “We expect the ICE industry is going to have a long tail and it’s going to be a significant part of our future,” Jacobson said.

    2025 GMC Yukon AT4 Ultimate

    The profit increases are expected to be assisted by some cost cutting, including consolidation of parts and options.
    On average, GM is experiencing about a 10% reduction in total part numbers per vehicle, Reuss said.

    Shareholder returns

    Jacobson said GM will remain “active” in share buybacks following the conclusion this quarter of a previously announced initiative that’s expected to retire roughly 250 million shares of the automaker.
    From 2022 through the end of 2024, GM will have returned about $20 billion to shareholders through share repurchases and dividends, Barra said.
    The automaker is targeting to get below 1 billion outstanding shares by early 2025, Jacobson said. It has more than 1.1 billion outstanding shares as of Wednesday morning, according to FactSet.

    Cruise and China

    Wall Street was underwhelmed with GM’s updates regarding its embattled Cruise autonomous vehicle unit and operations in China.
    GM’s operations in China have experienced a decade-long slide in earnings, and executives said they are discussing restructuring options with their China-based partners.

    “In China, you’ll begin to see evidence of a turnaround this year, with a significant reduction in dealer inventory and modest improvements in sales and share,” Barra said.
    Regarding Cruise, GM said its spending next year is not expected to top this year’s. It did not provide updates on its long-term plans for the troubled robotaxi business.
    With GM’s investor day being two days ahead of Tesla’s highly anticipated robotaxi day, Wall Street analysts expected some sort of update on the venture, especially regarding future financing or capital spend for the company.

    Other notes

    Hyundai Motor: When asked about GM’s announced non-binding memorandum of understanding with Hyundai, Barra said the teams “are working closely and making progress every week on what will become definitive agreements.”
    Chevy Bolt: GM said its next-generation Chevrolet Bolt EV that’s expected next year will be only slightly higher than the 2023 Bolt, which started at $28,795.
    PHEVs: GM reconfirmed plans to introduce plug-in hybrid electric vehicles, of PHEVs, in 2027. In the meantime, Reuss, citing single-digit market share, said GM is “not missing on anything right now without PHEVs.”

    — CNBC’s Michael Bloom contributed to this report. More

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    Life spans are growing but ‘health spans’ are shrinking. What that means for your money

    The average American is living longer.
    But older people live fewer years in good health. Their “health span” is shrinking.
    Chronic medical conditions are generally associated with higher healthcare expenses.

    Momo Productions | Digitalvision | Getty Images

    First, the good news: Americans are living longer than they used to.
    Now, the bad news: Older Americans are spending more years in poor health. That dynamic often comes with negative financial consequences, medical and financial experts say.

    Since 1960, the average U.S. life span has increased to 77.5 from roughly 70 years old, according to the Centers for Disease Control and Prevention.
    But “health spans” are simultaneously shrinking.
    A health span is the number of years older people spend in fundamentally good health, said Susan Roberts, a professor of medicine and epidemiology and senior associate dean for foundational research at Dartmouth College.

    Today, the average person spends about 10 years with chronic ailments like diabetes, cancer, arthritis, cardiovascular disease, dementia, cataracts or osteoporosis — roughly double the duration in the 1960s, Roberts said.
    As a result, there’s a “widening gap” between one’s life and health spans, she said.

    This is because medicine has gotten better at keeping sick people alive, though not necessarily treating them, Roberts said. Obesity, which is an underlying cause of many chronic diseases, is also more widespread, she said. Obesity affects 42% of U.S. adults, according to CDC data released in 2021.

    How health impacts wealth

    Fatcamera | E+ | Getty Images

    The concept of a health span is “increasingly important” for a household’s finances, said Stacy Francis, a certified financial planner based in New York and member of CNBC’s Advisor Council.
    Adults are spending more time “living a life where they’re not in their best state,” said Francis, president and CEO of Francis Financial. “And it results in significant expenses.”
    About 90% of the nation’s $4.5 trillion in annual health care costs are for people with chronic diseases and mental health conditions, according to the CDC.
    Medical costs get “worse and worse” once people have a chronic ailment, Roberts said.
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    The average 65-year-old retiring this year will spend about $165,000 in out-of-pocket health and medical expenses in retirement, up 5% from 2023, according to Fidelity Investments.
    Out-of-pocket treatment costs and early retirements due to poor health are two big ways chronic conditions impact households financially, experts said.
    Early retirement might mean claiming Social Security earlier than expected — perhaps resulting in a lower monthly benefit, said Carolyn McClanahan, a physician and CFP based in Jacksonville, Florida.
    “A person’s health directly impacts their wealth — and this connection becomes even more acute as people age,” Susan Silberman, senior director of research and evaluation at the National Council on Aging, said in a 2022 briefing.

    Of course, this isn’t to say healthy people avoid significant medical expenses.
    They may ultimately pay more over the long term relative to an unhealthy individual if they need long-term care, for example, which can be costly and more likely with age, said McClanahan, the founder of Life Planning Partners and a member of CNBC’s Advisor Council.
    Plus, healthy people experience more “go-go” years, meaning they can travel and spend on fun things, she said.

    Invest in yourself

    “When you are in your 40s and 50s, it’s the point of no return,” McClanahan said.
    If adults don’t start tending to their health by this age, they become more susceptible to chronic diseases like diabetes and high blood pressure, which can lead to sudden issues like strokes and heart attacks, she said.
    Treat purchases of healthy food, gym memberships or exercise classes as an investment in yourself, said Francis. Prioritize the spending on your health and, if it feels like too much money, try to cut back on spending that “doesn’t increase your health span,” she said.

    “I think of that like an investment I put in my 401(k),” Francis said.
    “Those extra dollars … will add years to your life and you’ll make up for it,” she said.
    More than half of people can reverse a diabetes diagnosis by losing 10% of their weight within the first seven years of that diagnosis, Roberts said.
    The “biggest tragedy” of chronic ailments is that “they’re preventable,” Roberts said. A few dietary tweaks — eliminating sugary drinks like soda and juice, and eating small, healthy snacks like an apple — can make a “dramatic difference,” she said.
    “Learning to like healthy foods is actually not that difficult,” Roberts said. “Practice it for a couple weeks and be patient with yourself.” More

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    GM expects 2025 earnings to be similar to this year’s despite industry headwinds

    General Motors expects its 2025 adjusted earnings to be in a “similar range” to the company’s results this year, CFO Paul Jacobson said during the company’s investor day.
    The Detroit automaker’s targeted adjusted earnings before interest and taxes this year is between $13 billion and $15 billion, or $9.50 and $10.50 per share.

    New GMC trucks are displayed on the sales lot at Hanlees Hilltop GMC in Richmond, California, July 2, 2024.
    Justin Sullivan | Getty Images

    DETROIT — General Motors expects its 2025 adjusted earnings to be in a “similar range” to the company’s results this year, CFO Paul Jacobson said Tuesday during the company’s investor day.
    The Detroit automaker’s targeted adjusted earnings before interest and taxes for 2024 were between $13 billion and $15 billion, or $9.50 and $10.50 per share, up from previous guidance of $12.5 billion to $14.5 billion, or $9 to $10 per share, earlier this year.

    Achieving its 2024 targets as well as similar earnings next year would be quite an accomplishment. Auto industry sales and consumer spending have been slowing and many on Wall Street expect that 2025 will be a significantly more challenging year for automakers.
    Jacobson declined to provide specific financial targets until the company formally releases its 2025 financial guidance early next year.
    He said the earnings, which many expect to be down for most automakers, will be assisted by $2 billion to $4 billion in better earnings for electric vehicles, as well as growing sales and profits of traditional gas-powered vehicles.
    Jacobson said based on current assumptions, GM will have eight vehicles in the market that, on average, will be approximately nine points higher in EBIT margin than previous comparable models.
    “We expect to see the benefits grow in the coming years as the organization continues to embrace more efficient ways to engineer, produce and sell our vehicles,” Jacobson said.

    He said GM’s capital spend also is expected to be consistent in 2025 with this year. GM’s 2024 financial guidance includes anticipated capital spending of between $10.5 billion and $11.5 billion.
    The EV tailwinds are split between savings from increases in volume and lower costs, including for raw materials and battery production.
    GM has improved its EV variable profit by more than 30 points year over year through the third quarter, Jacobson said.
    GM CEO Mary Barra said Tuesday the automaker is on pace to produce and wholesale about 200,000 EVs for North America in 2024, achieving profitability on a production, or contribution-margin basis, by the end of this year. That guidance is down from a prior target of 200,00 to 250,000 EVs, which had been lowered from as high as 300,000 units.
    Also assisting GM’s earnings in 2025 are expected reductions to fixed costs, which have come down by $2 billion over the past two years net of depreciation and amortization, as well as relatively stable demand and incentive spend by the automaker.
    Other than the financial targets for 2025, the automaker provided few significant updates at its investor day.
    Shares of GM closed Tuesday essentially unchanged at $46.01. The stock remains up about 28% this year, but it has been under pressure of late due to several downgrades and price target adjustments by Wall Street analysts.
    Correction: GM has improved its EV variable profit by more than 30 points year over year through the third quarter. A previous version misstated that figure. More

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    Ozempic underworld: Inside the black market of obesity drugs

    BOULDER, COLO. — Not far from the majestic Rocky Mountains is an ordinary suburban neighborhood, a tree-lined street and a modest light gray home.
    It’s not the kind of place you’d imagine an investigation into black market Ozempic would lead. But it did.

    A CNBC investigation into counterfeit weight loss drugs revealed an international illegal marketplace where criminals either brazenly alter the drugs or ship the real product from overseas — what’s known as drug diversion and against federal law.
    The operations mainly involve phony or illegal versions of Novo Nordisk’s diabetes drug Ozempic and its obesity drug Wegovy as well as Eli Lilly’s Mounjaro and Zepbound. All four drugs are in a class of wildly popular weight loss drugs known as GLP-1s. The skyrocketing demand for the treatments has led to criminal schemes attempting to capitalize on the surge.
    CNBC bought a drug marketed as Ozempic from a company called Laver Beauty, which on its website and corporate documents listed its address on that quiet residential street in Boulder. The drug cost $219 for a month’s supply, a fraction of the list price of $968 for a month’s supply of Ozempic in the U.S.
    The owners of the home in Boulder say they have no connection to the company — though they’ve received mail and a 1099 IRS tax form addressed to Laver Beauty.
    The drug CNBC purchased was shipped via DHL from an office building in Shijiazhuang, China, about a four-hour drive from Beijing. The package that arrived at CNBC headquarters in Englewood Cliffs, New Jersey, was a plain cardboard box with no refrigeration except for two melted ice packs. Ozempic is supposed to be stored refrigerated. The drug packaging, which appeared authentic, featured Chinese writing and the Novo Nordisk logo.

    In an email, Novo Nordisk said the drug appeared to be “diverted legitimate product that was produced for, and distributed to, the Chinese market during late ’23 and early ’24. Therefore, it would be unauthorized/unapproved for the US market.”
    The company added that it “cannot confirm the sterility, which may present an increased risk of infection for patients who use the counterfeit product.”
    Law enforcement sources told CNBC that the Ozempic received from China is part of a larger ongoing federal investigation into Ozempic packages being shipped to the U.S.
    Laver Beauty did not respond to CNBC’s request for comment, but a person who identified himself as a company representative told CNBC in a WhatsApp chat, “All our products are genuine. We don’t sell fake ones.” The person acknowledged that the product CNBC purchased was intended for the Chinese market.
    The representative also messaged that the Boulder address “is the previous address of our U.S. warehouse.” A day after CNBC inquired about the Boulder address, it was removed from the company’s website.

    Counterfeit medication

    The Ozempic that CNBC purchased is considered an illegally diverted drug. A separate but related growing problem is the rise of counterfeit drugs — fake products purporting to be the real thing.
    In the United Kingdom, authorities last year seized hundreds of counterfeit Ozempic pens — insulin pens that had been relabeled as Ozempic.
    “We saw that the demand increased and quite often as it happens in these situations, criminals try and fill a gap where the supply and demand aren’t balanced for a particular product, and we started seeing real counterfeit versions of the Ozempic product on the market,” said Andy Morling, deputy director of criminal enforcement for the U.K.’s Medicines and Healthcare Products Regulatory Agency.

    Andy Morling, deputy director of criminal enforcement for the U.K.’s Medicines and Healthcare Products Regulatory Agency, holds up a real and fake Ozempic pen.

    Morling spoke to CNBC from a warehouse outside London where the counterfeits are stored. A total of 869 Ozempic counterfeit pens were seized in 2023.
    Counterfeit weight loss drugs have serious health risks, according to the pharmaceutical companies and federal officials. In some cases they could be fatal to someone using them.
    Eli Lilly, the maker of Mounjaro and Zepbound, said it is actively fighting the counterfeits.
    “We have a very elaborate and rigorous system to test medicines before they’re allowed to be used in patients. But unfortunately [counterfeits] don’t go through that system at all,” said Dr. Daniel Skovronsky, Eli Lilly’s chief scientific officer and president of Lilly Research Labs.

    Dr. Daniel Skovronsky, Eli Lilly’s chief scientific officer and president of Lilly Research Labs, shows samples of real and counterfeit Mounjaro.

    He showed CNBC a sophisticated fake that was labeled as Mounjaro but that contained a different medication entirely — one for Type 2 diabetes that doesn’t cause weight loss.
    “It looks to all the world like Mounjaro, comes in a box that’s labeled as Mounjaro,” he said. “And it has pens that are labeled as Mounjaro. But it’s not Mounjaro at all.”
    Counterfeiters are already trying to cash in on a weight loss drug that the company hasn’t even put on the market yet: retatrutide. CNBC found it’s being sold online.
    “We’re testing it in Phase 3 clinical trials today. We don’t know yet, but I hope to get those results next year and we’ll find out,” Skovronksy said.
    Asked about sites selling what they claim is retatrutide, Skovronksy said, “Yeah, that’s crazy … Even the real retatrutide is not ready for patient use outside of clinical trials.”

    Port seizures rising

    Finding fake or diverted Ozempic and other obesity drugs is common at the sprawling international mail facility located on the grounds of John F. Kennedy International Airport in New York City. More than 60,000 seizures of counterfeit and illegal goods were made last year at the facility.

    Seized Ozempic, Wegovy and other weight loss drugs at JFK International Mail Facility.

    “I am not surprised, unfortunately, any of these new type of drugs that we’re seeing, whether it be weight loss drugs or other drugs,” Sal Ingrassia, the port director overseeing U.S. Customs and Border Protection (CBP) at JFK, told CNBC. “We’ll see them either diverted, counterfeited or illegally shipped through this facility.”
    According to CBP, since Jan. 1 the agency has made more than 198 seizures of medication labeled as Ozempic. Nine shipments of medication labeled as Wegovy were also seized, as well as one shipment labeled as Mounjaro.
    The CBP seizures data doesn’t specify how much of that medication was real and diverted to the U.S. or counterfeit.

    Sal Ingrassia is the port director at JFK for U.S. Customs and Border Protection.

    CNBC showed Ingrassia the Ozempic that it purchased from Laver Beauty, the package lacking the required refrigeration, and he said it was clear the shipment had “broken the legal supply chain.”
    “This to me, is something that if we see, we are going to intercept and take action on. This is a dangerous product,” he said.
    Ingrassia said he expects the number of interceptions of weight loss products to double this year over last.
    And what happens to the seized items? Unless they’re part of an active investigation by the FDA, Ingrassia said, U.S. Customs isn’t allowed to destroy them, because the injection pens are categorized as medical devices. They are then sent back to the foreign supplier.

    Illegal websites crackdown

    Ingrassia said that for the most part, diverted products are ordered online or via social media.
    “These are mostly individuals that are ordering this, going online and looking for a deal. And obviously taking a big risk by doing that. But we’ve also seen these products being ordered by doctors’ offices,” he said.
    To go after the sellers of counterfeit or illegally diverted drugs, the pharmaceutical industry has teamed up with BrandShield, a cybersecurity company.
    BrandShield CEO Yoav Keren showed CNBC various sites that the company flagged and that ultimately got shut down, including a Facebook account and a TikTok account that impersonated GLP-1 makers and sold versions of the drug.
    Spokespeople for Meta, the parent company of Facebook and Instagram, and TikTok said their platforms do not allow the sale of prescription drugs and that the companies take action to remove those listings.
    A Meta spokesperson in an email to CNBC said, “This is a challenge that spans platforms, industries, and communities which is why we work with law enforcement, regulators, and private industry to combat this problem. We continue to invest resources and further improve our enforcement on this kind of content.”
    Keren said 250 sites identified by BrandShield as related to bogus weight loss products were removed last year, eight times the number in 2022.
    “It’s kind of a whack-a-mole, but we’re on them. We’re chasing them, this is our technology, we find them very quickly,” he said.

    The Turkey connection

    Counterfeit Ozempic has been reported in 15 countries, according to the World Health Organization, which issued a global alert in June warning of the health risks of purchasing fake products.
    For the U.S. government, it’s a big problem.
    “We are seeing a lot of diverted medicines coming in from Europe and South America,” said Nicole Johnson, national program manager for the Intellectual Property Rights Coordination Center, which fights counterfeiting. “But for counterfeits, a lot of what we’re seeing currently in the United States is just the reuse of old Ozempic pens — so people can actually just take the original packaging and fill it with saline.”

    Nicole Johnson is National Program Manager for the Intellectual Property Rights Coordination Center.

    Johnson said the top countries where counterfeits and diverted drugs originate are India, China, the United Kingdom, Mexico and Turkey. In Turkey, she says, government-subsidized pharmaceuticals have fueled the counterfeit drug market.
    Istanbul may be known for the beauty of the Bosphorus, surrounded by stunning palaces and mosques. But it’s also one of the epicenters of the lucrative counterfeit drug trade, according to U.S. authorities who track counterfeit drugs.
    “What the criminals normally do is they find something to exploit to make more money. So the pharmaceuticals were then bought up, and then sold throughout the world — something that was supposed to help people, and it’s being exploited,” Johnson said.
    Last fall, the Turkish National Police conducted raids throughout Istanbul as part of a coordinated international crackdown.
    Maziar Mike Doustdar, executive vice president of international operations for Novo Nordisk, agreed that Turkey has become a hot spot for pharmaceutical crime.

    Maziar Mike Doustdar is Executive Vice President of Novo Nordisk’s international operations, based in Zurich.

    Counterfeiters have acquired sophisticated packaging equipment that is “on par with the original company equipment,” Doustdar said.
    “They source the equipment from pretty much the same place as we or our competitors are sourcing it. So, they make the packaging look very, very, similar to the original product,” he said.
    Direnc Bada, an Istanbul-based attorney who represents major pharmaceutical companies in Turkey, pointed to “an increasing amount of online channels promoting these products … and it’s forbidden in Turkey actually to sell these through online channels.”

    Direnc Bada is an attorney who represents pharmaceutical companies in Turkey.

    FDA alert, complaints

    In the U.S., the FDA announced in an alert in December that it had seized “thousands of units of counterfeit” Ozempic in the “legitimate U.S. supply chain.”
    Asked about the status of the investigation into the counterfeit Ozempic, an FDA spokesperson said there were no updates to the original alert.
    The risks in purchasing counterfeit drugs can be high. Given the delicate nature of the formulation and the specific shipping requirements for the drugs, consuming illegal versions can be dangerous to a person’s health.
    “It’s one thing to counterfeit a luxury bag. It’s a very, very different thing when you counterfeit a medicine,” Doustdar said.
    Reports of issues with weight loss drugs containing semaglutide, the active ingredient in Ozempic, or tirzepatide, the active ingredient in Mounjaro, have seen a sharp rise since 2019.
    “This is a very serious problem for us as a pharma company, as an industry, because patient safety is our license to operate. And you’re playing with people’s safety,” Doustdar said.
    “There is no good counterfeit,” he said.
    — CNBC’s Eunice Yoon and Paige Tortorelli contributed to this report. More

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    HSBC exec says there’s a lot of AI ‘success theater’ happening in finance

    “Candidly, there’s a lot of success theater out there” when it comes to applying artificial intelligence in banking, HSBC’s head of generative AI said at a tech event in London this week.
    Achtner’s comments come as other figures in the financial services sector — particularly leaders at startup firms — have made bold statements about the level of overall efficiency gains and cost reductions they are seeing as a result of investments in AI.
    Nathalie Oestmann, head of NV Ltd, said that as long as people are “trained appropriately” and banks and other financial services firm can “reinvent” themselves in the new AI era, “it will just help us to evolve.”

    Big technology companies are betting that a new wave of smaller, more precise AI models will be more effective when it comes to the needs of businesses in sectors like law, finance, and health care.
    Jaap Arriens | NurPhoto via Getty Images

    LONDON — Increasingly many financial services firms are touting the benefits of artificial intelligence when it comes to boosting productivity and overall operational efficiency.

    Despite bold statements, a lot of companies are failing to produce tangible results, according to Edward J Achtner, the head of generative AI for U.K. banking giant HSBC.
    “Candidly, there’s a lot of success theater out there,” Achtner said on a panel at the CogX Global Leadership Summit alongside Ranil Boteju — a fellow AI leader at rival British bank Lloyds Banking Group — and Nathalie Oestmann, head of NV Ltd, an advisory firm for venture capital funds.
    “We have to be very clinical in terms of what we choose to do, and where we choose to do it,” Achtner told attendees of the event, held at the Royal Albert Hall in London earlier this week.
    Achtner outlined how the 150-year-old lending institution has embraced artificial intelligence since ChatGPT — the popular AI chatbot from Microsoft-backed startup OpenAI — burst onto the scene in November 2022.
    The HSBC AI leader said that the bank has more than 550 use cases across its business lines and functions linked to AI — ranging from fighting money laundering and fraud using machine learning tools to supporting knowledge workers with newer generative AI systems.

    One example he gave was a partnership that HSBC has in place with internet search titan Google on the use of AI technology anti-money laundering and fraud mitigation. That tie-up has been in place for several years, he said. The bank has also dipped its toes deeper into genAI tech much more recently.

    “When it comes to generative artificial intelligence, we do need to clearly separate that” from other types of AI, Achtner said. “We do approach the underlying risk with respect to generative very differently because, while it represents incredible potential opportunity and productivity gains, it also represents a different type of risk.”
    Achtner’s comments come as other figures in the financial services sector — particularly leaders at startup firms — have made bold statements about the level of overall efficiency gains and cost reductions they are seeing as a result of investments in AI.
    Buy now, pay later firm Klarna says it has been taking advantage of AI to make up for loss of productivity resulting from declines in its workforce as employees move on from the company.
    It is implementing a company-wide hiring freeze and has slashed overall employee headcount down to 3,800 from 5,000 — a roughly 24% workforce reduction — with the help of AI, CEO Sebastian Siemiatkowski said in August. He is looking to further reduce Klarna’s headcount to 2,000 staff members — without specifying a time for this target.
    Klarna’s boss said the firm was lowering its overall headcount against the backdrop of AI’s potential to have “a dramatic impact” on jobs and society.
    “I think politicians already today should consider whether there are other alternatives of how they could support people that may be effective,” he said at the time in an interview with the BBC. Siemiatkowski said it was “too simplistic” to say AI’s disruptive effects would be offset by the creation of new jobs thanks to AI.
    Oestmann of NV Ltd, a London-based firm that offers advisory services for the C-suite of venture capital and private equity firms, directly touched on Klarna’s actions, saying headlines around such AI-driven workforce reductions are “not helpful.”
    Klarna, she suggested, likely saw that AI “makes them a more valuable company” and was consequently incorporating the technology as part of plans to reduce its workforce anyway.

    The result Klarna is seeing from AI “are very real,” a Klarna spokesperson told CNBC. “We publicize these results because we want to be honest and transparent about the impact genAI is having in the real world in companies today,” the spokesperson added.
    “At the end of the day,” Oestmann added, as long as people are “trained appropriately” and banks and other financial services firm can “reinvent” themselves in the new AI era, “it will just help us to evolve.” She advised financial firms to pursue “continuous learning in everything that you do.”
    “Make sure you are trying these tools out, make sure you are making this part of your everyday, make sure you are curious,” she added.
    Boteju, chief data and analytics officer at Lloyds, pointed to three main use cases that the lender sees with respect to AI: automating back office functions like coding and engineering documentation, “human-in-the loop” uses like prompts for sales staff, and AI-generated responses to client queries.
    Boteju stressed that Lloyds is “proceeding with caution” when it comes to exposing the bank’s customers to generative AI tools. “We want to get our guardrails in place before we actually start to scale those,” he added.
    “Banks in particular have been using AI and machine learning for probably about 15 or 20 years,” Boteju said, signaling that machine learning, intelligent automation and chatbots are things traditional lenders have been “doing for a while.”
    Generative AI, on the other hand, is a more nascent technology, according to the Lloyds exec. The bank is increasingly thinking about how to scale that technology — but by “using the current frameworks and infrastructure we’ve got,” rather than by moving the needle significantly.

    Boteju and Achtner’s comments tally with what other AI leaders of financial services have said previously. Speaking with CNBC last week, Bahadir Yilmaz, chief analytics officer of ING, said that AI is unlikely to be as disruptive as firms like Klarna are suggesting with their public messaging.
    “We see the same potential that they’re seeing,” Yilmaz said in an interview in London. “It’s just the tone of communication is a bit different.” He added that ING is primarily using AI in its global contact centers and internally for software engineering.
    “We don’t need to be seen as an AI-driven bank,” Yilmaz said, adding that, with many processes lenders won’t even need AI to solve certain problems. “It’s a really powerful tool. It’s very disruptive. But we don’t necessarily have to say we are putting it as a sauce on all the food.”
    Johan Tjarnberg, CEO of Swedish online payments firm Trustly, told CNBC earlier this week that AI “will actually be one of the biggest technology levers in payments.” But even so, he noted that the firm is focusing more of the “basics of AI” than on transformative changes like AI-led customer service.
    One area where Trustly is looking to improve customer experience with AI is subscriptions. The startup is working on an “intelligent charging mechanism” that would aim to figure out the best time for a bank to take payment from a subscription platform user, based on their historical financial activity.
    Tjarnberg added that Trustly is seeing closer to 5-10% improved efficiency as a result of implementing AI within its organization. More