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    ‘People just want their jets.’ Paris Air show returns as Boeing, Airbus race to increase production

    The Paris Air Show returns Monday after a four-year hiatus during the pandemic.
    An aviation analytics firm expects there could be 2,100 aircraft orders during the show.
    Meanwhile, Boeing and Airbus are racing to increase production to meet strong demand.

    An employee works at the Airbus A350 assembly site, in Colomiers near Toulouse, south-western France, on December 9, 2022.
    Valentine Chapuis | AFP | Getty Images

    A lot has changed in the four years since one of the aviation industry’s biggest air shows was held in person.
    The Covid-19 pandemic devastated travel demand, the aviation industry shed thousands of experienced workers and roller coaster appetites for new jets wreaked havoc on production rates of new planes.

    After all that, the Paris Air Show — a trade event where companies get a chance to showcase new technology, commercial and military aircraft, and strike deals — returns on Monday during a surge in air travel demand, with airlines starving for jets to feed it. The question is whether Boeing, Airbus and their numerous suppliers can catch up.
    “That’s creating pressure on the order books — it’s creating upward momentum on used aircraft lease rates and forcing airlines to make compromises,” said Andy Cronin, CEO of aircraft-leasing firm Avolon.
    Aviation analytics firm IBA estimated last week that there could be orders for about 2,100 planes during the show as airlines replace older aircraft and prepare for future growth in air travel.
    Over the past year, Boeing has logged large orders or preliminary agreements from customers including United Airlines, Saudia and new Saudi carrier Riyadh Air. Air India’s massive order earlier this year included both Boeing and Airbus jets.
    Turkish Airlines’ chairman told reporters last month that the carrier is planning to order around 600 aircraft, both wide-body and narrow-body planes. The order would be the largest ever for a single airline, though it isn’t clear whether that would come together in time for the show.

    IBA’s chief economist, Stuart Hatcher, wrote in a June 15 forecast that Delta Air Lines, Malaysia Airlines and Air France-KLM could be buyers, but the timing isn’t yet certain. Air Baltic could also look to expand its Airbus A220 fleet, he said.
    “It might still be too early to call any Chinese expansion yet given the political climate, but I wouldn’t be surprised to see top-up orders coming through,” Hatcher wrote.

    Arrows pointing outwards

    The major challenge for manufacturers now is increasing production. Slots for narrow-body jets, such as Boeing 737s and Airbus A320s, are sold out for years. Now that long-haul travel is returning, some airlines could also be looking to expand their fleets of larger, long-range jets.
    But customers around the world have been forced to wait longer than expected for new planes as Boeing, Airbus and a web of suppliers around the world try to ramp up output. That has limited airline capacity, keeping airfares high.
    Qantas CEO Alan Joyce told CNBC last week that he expects supply chain issues to last into 2025.
    Boeing and Airbus are scrambling to raise production rates for the coming years to meet that demand.
    The production delays have also driven up rates to lease both new and older planes as airlines search for other opportunities to boost flights.
    New Boeing 737 Max 8 planes are leasing for about $350,000 a month in July, up from $305,000 in January 2020 as the pandemic was beginning, IBA estimates. New Airbus 320s are going for $355,000, up from $325,000 over that period. Older versions are close to pre-pandemic levels.
    “People just want their jets,” said Richard Aboulafia managing director of AeroDynamic Advisory. More

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    Blinken meets Chinese Foreign Minister Qin Gang on high-stakes diplomatic trip to Beijing

    Blinken’s original travel plans for February were disrupted by news of an alleged Chinese spy balloon flying over U.S. airspace.
    The trip by Blinken makes him the highest-level American official to visit China since Biden became U.S. president and the first U.S. secretary of state to make the trip in nearly five years.
    Blinken is set to have a working dinner later Sunday at the Diaoyutai State Guesthouse with Qin.

    US Secretary of State Antony Blinken (L) walks with China’s Foreign Minister Qin Gang (R) ahead of a meeting at the Diaoyutai State Guesthouse in Beijing on June 18, 2023.
    Leah Millis | Afp | Getty Images

    U.S. Secretary of State Antony Blinken on Sunday met with Chinese Foreign Minister Qin Gang and top diplomat Wang Yi in Beijing on a high-stakes diplomatic mission to cool U.S.-China tensions that have overshadowed geopolitics in recent months.
    The trip by Blinken makes him the highest-level American official to visit China since Joe Biden became U.S. president and the first U.S. secretary of state to make the trip in nearly five years.

    Blinken’s original travel plans for February were disrupted by news of an alleged Chinese spy balloon flying over U.S. airspace. The U.S. ultimately shot down the alleged spy balloon, and tensions between the world’s two largest economies have since remained tense. Beijing insisted the balloon was an unnamed weather tracker that blew off course.
    Blinken is set to have a working dinner later Sunday at the Diaoyutai State Guesthouse with Qin, who was previosuly China’s ambassador to the U.S. Some reports suggest there may also be a meeting with President Xi Jinping on Monday during Blinken’s two-day visit.
    Expectations for a significant recovery in the U.S.-China relationship, especially as a result of Blinken’s trip, remain low. State department spokesperson Matthew Miller said in a statement last week that Blinken will discuss the importance of maintaining open lines of communication and will “raise bilateral issues of concern, global and regional matters, and potential cooperation on shared transnational challenges.”
    At the annual Shangri-La Dialogue event in Singapore earlier this month, the U.S. defense chief and his Chinese counterpart didn’t have a formal meeting. And more broadly, international travel restrictions during the Covid-19 pandemic limited contact between the U.S. and Chinese governments.
    In August, a controversial visit to Taiwan by Nancy Pelosi, then speaker of the U.S. House of Representatives, fueled Beijing’s ire. Beijing considers Taiwan part of its territory, with no right to conduct diplomatic relations on its own. The U.S. recognizes Beijing as the sole legal government of China, while maintaining unofficial relations with the island, a democratically self-governed region.

    Read more about China from CNBC Pro

    Biden’s visit to Beijing could also possibly pave the way for a November meeting between Biden and his Chinese counterpart Xi — their first since Bali in November, a day before a G-20 summit kicked off.
    In late May, the U.S. commerce secretary and her Chinese counterpart met in Washington, D.C. And U.S. Treasury Secretary Janet Yellen is also expected to visit China at an unspecified time.
    China’s new ambassador to the U.S., Xie Feng, arrived in the U.S. in late May after a period of about six months with no one in that position. Biden said around the same time that he expected U.S.-China tensions would “begin to thaw very shortly.”
    A potential opportunity for Biden and Xi to meet again would be in November, during the Asia-Pacific Economic Cooperation Leaders’ Summit that’s set to be held in San Francisco. More

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    One TikTok at a time: How Kyla Scanlon is making finance fun

    She’s considered an influencer who uses TikTok, Instagram and YouTube to make financial education fun for young audiences.
    Kyla Scanlon, 25, is a former options trader and the founder of Bread, a company that produces videos and skits that go viral.

    “I’ll pretend to be [Federal Reserve Chair] Jerome Powell [or] pretend to be different stocks,” Scanlon told CNBC’s “ETF Edge” this week. “That really gets people involved because they’re like, ‘Oh, that’s funny. I can look at that and laugh’ … That really humanizes finance and brings people in in a way they wouldn’t normally expect.”
    Her content focuses on helping young people understand how various economic topics affect them.
    “When we talk about the Federal Reserve, it’s oftentimes very abstract. Like, they’re raising interest rates, but what does that really mean?” Scanlon said. “People want to know how things impact them directly.”
    One of her viral videos is on the prevalence of “doomerism.” She defines it as a pessimistic view of life and the economy focusing on everything that’s going wrong.
    “It’s a really enticing philosophy for people to subscribe to because it sort of removes agency from your life,” said Scanlon, who wants to give her audience a greater understanding of the hot-button Wall Street issues including the jobs market, inflation and recent bank failures.

    As of late this week, Scanlon has almost 166,000 followers on TikTok, more than 156,000 on Twitter and 28,000 YouTube subscribers.
    CORRECTION: This story has been updated to correct Kyla Scanlon’s age.

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    How restaurants such as Panera and Chipotle are dipping into A.I. to streamline food prep and ordering

    Restaurant brands are starting to pilot artificial intelligence to streamline food service.
    Analysts say a key benefit is the potential to ease workforce challenges in an ongoing tight hiring market.
    A wave of pilot programs has already begun.

    From drive-thru to back-of-house operations to predictive ordering for consumers, restaurant brands are starting to pilot artificial intelligence to streamline food service.
    The technology has yet to reach critical mass at major chains but has the potential to automate more tasks and give restaurant workers the opportunity to have a more meaningful experience with guests.

    Analysts say a key benefit is the potential to ease workforce challenges in an ongoing tight hiring market. The National Restaurant Association predicts the industry will add 500,000 jobs by the end of 2023, but notes there’s currently just one job seeker for every two open positions.
    What’s more, TD Cowen estimates voice-enabled AI can drive sales as much as 15% through suggestive selling as well as speed up service times by 10 seconds.
    The industry shift is reminiscent of the emergence of third-party delivery services five years ago, before it was ubiquitous at nearly every major restaurant operator, according to Andrew Charles, managing director of consumer and restaurants at TD Cowen.
    “Some were trying it, others we’re contemplating it, most were piloting it,” he said of third-party apps for delivery services. “I think there’s a clear analogue to today where it’s very similar and as we continue to see further adoption of this, you will see a domino effect here.”
    But there are still hurdles to broad adoption, according to Charles. Many of these large restaurant chains need to get franchisees on board. Language barriers and menu nuances can add complexity to the ordering process that AI may not be able to navigate.

    Meanwhile, the wave of pilot programs has already begun.
    Last month, Carl’s Jr. and Hardee’s parent company CKE announced it was aiming to launch AI integrations nationwide via partnerships with Presto and OpenCity AI.
    Yum! Brands in recent years has been a leader in leveraging AI to enhance operations, including its 2021 acquisition of Dragontail aimed at streamlining food prep and delivery. The tech, which automates kitchen flow, driver dispatch and customer order tracking, is used in 1,000 Pizza Hut locations in the U.S., and nearly 3,000 more globally. The company also relies on AI for its recommended ordering module that informs managers of how much product to order weekly.
    McDonald’s, for its part, sold McD Tech Labs to IBM in 2021, entering a strategic partnership to help bring AI technology to drive-thru lanes. McD Tech Labs, which was formerly known as Apprente before McDonald’s acquired it, used AI to understand drive-thru orders. So far, McDonald’s has tested the technology at certain locations.
    Del Taco is also using voice-activated AI for orders at its drive-thru, as is Wingstop for orders placed by phone.
    Panera Bread has likewise invested in the technology in both front- and back-of-house operations. It’s working with OpenCity AI on drive-thru voice ordering and with Miso Robotics to sure up coffee quality and temperature control to boost product consistency.
    For Panera, it’s a question of, “How do we redeploy our people to higher value, higher quality guest experiences,” said Chief Digital Officer George Hanson. “Whether they’re spending more time on the food preparation and the quality control, or in person interaction,” Hanson told CNBC in an interview.”It might be just swinging around into the dining room and asking them how their meal is or if they can bus their table — just having those warm interactions. We view that as higher value.”

    Chipotle is testing out an autonomous kitchen assistant, Chippy, which offers a robotic solution for making chips in restaurants.
    Courtesy: Chipotle

    Chipotle, a tech leader in the restaurant space, has also partnered with Miso Robotics, introducing Chippy, its robotic chipmaker, which is currently installed and cooking chips in a restaurant location in Fountain Valley, California. Using AI, Chippy has been trained to recreate the brand’s exact chip recipe with salt and fresh lime juice. The next iteration of Chippy will determine the amount of chips that need to be made, too.
    The company has also implemented AI on its app to deploy suggestive ordering and uses camera systems at its Cultivate Center test kitchen to provide real-time data on the amount of product needed based on customer volume to be more predictive and less reactive.
    Chief Customer and Technology Officer Curt Garner told CNBC the hope is for AI and robotics to amplify and improve human experiences at the company’s restaurants.
    “[It’s] helping the crew members, managers, the team to adapt to their current environment as a tool, but not taking them out of the equation of serving our guests and running the ship,” he said. More

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    Why Charles Schwab became a financial ‘supermarket’

    Charles Schwab Corp. is the largest publicly traded brokerage business in the United States with $7.5 trillion of client assets, and is a leading service provider for financial advisors, among the top exchange-traded fund asset managers and one of the biggest banks.
    “It would be fair to characterize Charles Schwab as a financial services supermarket,” Michael Wong, director of North American equity research and financial services at Morningstar, told CNBC. “Anything that you want, you can find in Charles Schwab’s platform.”

    Over the decades, Charles Schwab helped usher in a low-cost investing revolution while surviving market crashes and fierce competition — even when the game was taken up a notch to zero-fee commissions in 2019. 
    “Inherently, this is a scale business. The larger you are, the more efficient you are from an expense perspective,” Alex Fitch, portfolio manager for the Oakmark Select Fund and the Oakmark Equity and Income Fund, which invests in Charles Schwab, told CNBC. “It enables you to cut prices.”
    Various facets of Charles Schwab’s business compete against many legacy full-service brokers and investment bankers, including Fidelity, Edward Jones, Interactive Brokers, Stifel, JPMorgan, Morgan Stanley and UBS. And, it has to battle in the financial tech market against companies like Robinhood, Ally Financial and SoFi. 
    The melee reached a turning point in 2019 when Charles Schwab announced it was slashing commissions for stock, ETF and options trades to zero, matching the fees offered by Robinhood when it entered the market in 2014.
    Quickly, other companies followed suit and cut fees, which damaged TD Ameritrade’s business enough that Charles Schwab ended up acquiring it in a $26 billion all-stock deal less two months later.

    Charles Schwab was among the firms that benefited from the growth of retail investing during the coronavirus pandemic, and it’s now facing the consequences of Federal Reserve’s aggressive interest rate hikes. 
    That’s because of Charles Schwab’s huge banking business that generates revenue from sweep accounts, which are when the firm uses money leftover in investors’ portfolios and reinvests it in securities, like government bonds, to help turn a profit. 
    Charles Schwab told CNBC it was unable to participate in this documentary.
    Watch the video above to learn more about how Charles Schwab battled the ever-evolving financial services market – from fees to fintech – and how the reward doesn’t come without the risk.  More

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    Bristol Myers Squibb sues Biden administration over Medicare drug negotiations in third such lawsuit

    Bristol Myers Squibb has sued the Biden administration over Medicare’s new powers to negotiate drug prices under the Inflation Reduction Act.
    The drugmaker said its blood thinner Eliquis will be subject to the negotiations later this year.
    Bristol Myer Squibb’s complaint mirrors the arguments made last week by Merck, the first company to sue over the law.
    The U.S. Chamber of Commerce also sued the Biden administration last week.

    Dado Ruvic | Reuters

    Bristol Myers Squibb on Friday sued the Biden administration over Medicare’s new powers to slash drug prices, the third such lawsuit to be filed against the program in a matter of days.
    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.

    Bristol Myers Squibb has asked the court to declare the program unconstitutional and prevent the Health and Human Services Department from forcing the company to enter negotiations.
    Bristol Myers Squibb’s arguments mirror those lodged last week by Merck, the first company to sue the federal government over the drug negotiations. The U.S. Chamber of Commerce has also sued HHS over the program with similar arguments.
    The Inflation Reduction Act, passed in 2022 in a narrow party-line vote, empowered Medicare to negotiate drug prices for the first time in the program’s six-decade history. The law is the central pillar in the Biden administration’s efforts to control rising drug prices and was a major victory for the Democratic Party.
    Bristol Myers Squibb said its blood thinner Eliquis, used to treat clots and strokes, will be subject to the negotiations this year. The company generated $11.8 billion in revenue from Eliquis last year, about 25% of the company’s $46 billion in total revenue for 2022.

    The drugmaker also said Opdivo, used to treat several types of cancer, will be subject to the Medicare negotiations in the future. Opdivo generated $8.2 billion in sales for the company in 2022, which made up about 18% of the drugmaker’s total revenue for that year.

    Bristol Myers Squibb argued the federal government is forcing the company to enter negotiations and eventually agree to a heavily discounted price. The company claims this violates Fifth Amendment protections against the government seizing private property without just compensation.
    The drugmaker also claimed HHS is forcing the company to publicly present the program as a negotiation over a fair price. The company called the negotiations a sham and claimed the federal government is forcing the drugmaker to “parrot its preferred political messaging” in violation of the First Amendment.
    HHS Secretary Xavier Becerra, in a statement after Merck’s lawsuit last week, vowed to vigorously defend the Inflation Reduction Act in court, saying, “The law is on our side.”
    White House Press Secretary Karine Jean-Pierre, also in a statement after Merck’s suit, said the Biden administration is confident it will win in court.
    “There is nothing in the Constitution that prevents Medicare from negotiating lower drug prices,” Jean-Pierre said. More

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    SEC says PIMCO to pay $9 million to settle alleged disclosure and procedure violations

    The SEC alleged PIMCO failed to give investors essential information about the use of interest rate swaps and the material effect of the swaps on PIMCO Global StocksPLUS & Income Fund’s dividend.
    The agency also claims the company failed to waive about $27 million of advisory fees.

    PIMCO headquarters building in Newport Beach, California.
    Scott Mlyn | CNBC

    The U.S. Securities and Exchange Commission said investment adviser Pacific Investment Management Company will pay $9 million to settle two enforcement actions related to disclosure and procedure violations.
    “We are pleased to resolve these matters relating to issues which occurred in two funds more than five years ago, and which PIMCO had fully addressed prior to the SEC’s investigations,” a PIMCO spokesperson said.

    The SEC alleged in a statement Friday that PIMCO failed to give investors essential information about PIMCO Global StocksPLUS & Income Fund’s (PGP) use of interest rate swaps and the material effect of the swaps on PGP’s dividend between September 2014 and August 2016.
    Additionally, the SEC claims the company failed to waive about $27 million of advisory fees, as required by its agreement with the PIMCO All Asset All Authority Fund, between April 2011 and November 2017.
    The SEC also alleged PIMCO did not have adequate written policies and procedures concerning its oversight of advisory fee calculations and related fee waivers until at least 2018. More

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    Stocks making the biggest moves midday: Virgin Galactic, iRobot, Cava, SoFi and more

    Virgin Galactic’s space tourism rocket plane SpaceShipTwo returns after a test flight from Mojave Air and Space Port in Mojave, California, December 13, 2018.
    Gene Blevins | Reuters

    Check out the companies making headlines in midday trading.
    Virgin Galactic — Shares of the space company soared 16.5%. On Thursday, the firm set its first commercial space tourism flight for this month. The company, which was founded by billionaire Richard Branson, completed its final test spaceflight in May.

    iRobot — The stock surged 21.2% after U.K. regulators approved Amazon’s $1.7 billion acquisition of the Roomba vacuum cleaner maker. Meanwhile, Amazon inched down about 0.5%.
    West Pharmaceutical Services — West Pharmaceutical Services gained 0.6% after Bank of America upgraded the life sciences stock to buy from neutral, saying it will benefit from the rise of drugs targeting weight loss.
    Cava Group — Cava Group shares dropped 12.9% during trading Friday, giving back some of its gains from its massive debut Thursday on the New York Stock Exchange. At one point, shares more than doubled in value during Cava’s first day of trading.
    SoFi Technologies — The financial technology stock dropped nearly 10% after both Bank of America and Piper Sandler downgraded it to neutral from buy, citing SoFi’s recent run higher. Bank of America said the fundamental aspects of the student loan repayment moratorium expiration is now largely priced in.
    Adobe — Shares added 0.9%. On Thursday, the company beat expectations and offered positive guidance when reporting for the fiscal second quarter. Adobe posted $3.91 in adjusted earnings per share on $4.82 billion in revenue, while analysts polled by Refinitiv anticipated earnings of $3.79 per share and $4.77 billion in revenue. Adobe said current-quarter and full-year revenue should come in around where Wall Street expects, while it said adjusted earnings per share in those periods would likely be higher than anticipated.

    Nvidia — The chipmaker at one point jumped more than 2% to another record high after Morgan Stanley analyst Joseph Moore switched his top pick to Nvidia from Advanced Micro Devices. The analyst said Nvidia has more immediate upside than other artificial intelligence stock plays. It closed up 0.1%.
    Micron Technology — Shares dipped 1.7% after Micron Technology said a China chip ban could hurt the company. “We now believe that approximately half of that China HQ customer revenue, which equates to a low-double-digit percentage of Micron’s worldwide revenue, is now at risk of being impacted,” the company said in a Friday filing with the U.S. Securities and Exchange Commission.
    Humana — Humana shares declined 3.9%. The company reaffirmed its full-year insurance segment benefit expense ratio guidance, between 86.3% and 87.3%, though it expects it will be at the top end of this outlook. The company cited higher-than-expected “non-inpatient utilization trends,” including emergency room, outpatient surgeries and dental services as a driver of this forecast.
    Truist Financial — Shares fell about 1% after Odeon Capital Group downgraded Truist Financial to hold from buy, according to FactSet.
    — CNBC’s Michelle Fox, Alex Harring and Yun Li contributed reporting. More