HR Block | June 27th, 2024

Today's insights are courtesy of Block Advisors by H&R Block, trusted by millions of small business owners for their year-round small business expertise.

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GOOD MORNING

Here's everything you need to know this week: Novo Nordisk has announced a significant $4.1 billion investment to expand the production capacity of its highly sought-after weight loss medication, Wegovy, its diabetes treatment, Ozempic, and other injectable therapies. This move addresses the urgent need for effective obesity treatments, given the high prevalence of obesity in the U.S.

The McKinsey Mobility Consumer Pulse 2024 report highlights shifting consumer preferences toward sustainable transportation, with 38% of respondents considering an electric vehicle (EV) for their next car. However, issues like inadequate charging infrastructure and costs remain significant barriers to widespread EV adoption.

Volkswagen has announced a $5 billion investment in electric vehicle startup Rivian, aiming to develop advanced electrical architecture and software technology. This strategic move could boost Rivian's performance and drive innovation in the EV sector, despite Rivian's recent stock decline.

Let’s dive into more detail below.

BIG PHARMA

Novo Nordisk Invests $4.1B to Expand Wegovy and Ozempic Growth

High demand for GLP-1 drugs like Wegovy and Ozempic drives significant expansion in production capacity

BREAKING NEWS
Novo Nordisk has announced a significant investment of $4.1 billion to expand the production capacity of its highly sought-after weight loss medication, Wegovy, its diabetes treatment, Ozempic, and other injectable therapies.

This move comes at a critical time, as the Centers for Disease Control and Prevention (C.D.C.) reported that over 41.9% of adults and 19.7% of children and adolescents in the U.S. are classified as obese, with 9.2% of adults suffering from severe obesity.

The prevalence of obesity, defined as a body mass index (B.M.I.) of 30 or higher, underscores the urgent need for effective treatments.

WHAT HAPPENED
Novo Nordisk’s decision to build a new manufacturing plant in Clayton, North Carolina, represents a strong move of confidence by enhancing its production capabilities for critical injectable therapies.

Novo has faced supply shortages over the past year, particularly with Wegovy and Ozempic, which led to this much-needed manufacturing expansion. About 1 in 8 adults in the United States has used a GLP-1 drug like Ozempic or Mounjaro at some point in their lives, and half of them—about 6% of adults, or more than 15 million people—are currently using a prescription, according to K.F.F.

This new facility will specialize in filling and packaging syringes and injection pens, ensuring a streamlined process to meet the growing demand.

Overall, the $4.1 billion investment is part of a broader $6.8 billion commitment to production this year, reflecting a substantial increase from the $4 billion invested in the previous year.

The construction is expected to be completed between 2027 and 2029, employing around 1,000 workers and adding to the existing workforce at the company’s three current North Carolina plants. These plants are already involved in various stages of production, including the manufacture of the active ingredient for the diabetes pill Rybelsus and the fill and finish work for other injectable drugs. This expansion underscores Novo Nordisk’s commitment to reinforcing its U.S. manufacturing presence, which complements its global network of 12 production sites.

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POLITICS

Trump Leads Biden by 1.3 Points Ahead of Historic Presidential Debate

With less than five months to the election, Biden and Trump clash on key issues like climate change, immigration, and more

BREAKING NEWS
President Joe Biden and Donald Trump are preparing to face off Thursday in their first presidential debate of the 2024 election cycle.

The showdown, hosted by CNN at 9 p.m. ET in Atlanta, will make history as the first debate between a sitting president and a former president.

According to RealClearPolitics, the current RCP Poll Average shows Trump leading Biden by 1.3 points.

WHAT HAPPENED
With fewer than five months until the election, the stakes are nothing short of high as President Biden and former President Trump make their pitches to voters on key issues such as climate change, immigration, and more.

Advisers and allies of Trump have encouraged him to focus on Biden’s mishandling of the economy, crime, and inflation, while Biden’s team is setting up Trump as his always volatile, unruly self with his bid for a return to the Oval Office.

According to the RealClearPolitics Electoral College map, Trump is projected to secure 219 electoral votes, with Biden at 202, and 117 votes are considered toss-ups. In a scenario without toss-up states, Trump leads with 312 electoral votes compared to Biden’s 226, highlighting the competitive nature of the race.

Regarding battleground states, Trump leads in Ohio with a significant margin of 8.7 points, whereas Biden holds leads in Minnesota and New Hampshire by 3.0 and 5.3 points, respectively. These swing states are crucial for both candidates as they could determine the overall outcome of the election.

President Biden’s job approval rating stands at 40.1%, with a disapproval rating of 56.1%. Additionally, 64.7% of respondents believe the country is on the wrong track, suggesting a challenging environment for the incumbent president.

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ELECTRIC VEHICLES

Volkswagen’s Bold $5 Billion Bet on Rivian Aims to Revitalize EV Market

Volkswagen and Rivian’s joint venture focuses on electrical architecture and software, excluding battery tech and propulsion

BREAKING NEWS
Volkswagen has announced plans to invest up to $5 billion in electric vehicle startup Rivian, beginning with an initial investment of $1 billion. This strategic move comes as Rivian’s stock has declined approximately 49% in 2024, indicating that Volkswagen’s investment could boost the struggling EV manufacturer. Currently, Volkswagen ranks 9th in market capitalization among car manufacturers, with a valuation of $59.97 billion as of June 2024.

WHAT HAPPENED
Volkswagen’s investment comprises an initial $1 billion in 2024, with an additional $4 billion expected by 2026. This includes $1 billion each in 2025 and 2026, followed by $2 billion related to a joint venture to develop electrical architecture and software technology. Shares of Rivian soared over 50% during after-hours trading following the announcement.

The initial $1 billion from Volkswagen will be a convertible note, potentially converting to Rivian shares on or after December 1. Rivian CEO RJ Scaringe stated that this capital would help the company become cash flow-positive and support production ramp-up at its Illinois and Georgia plants starting in 2026.

In the latter half of the decade, Volkswagen will leverage Rivian’s electrical architecture and software stack for vehicles. The joint venture will not involve battery technologies or vehicle propulsion platforms and will be led by co-CEOs from both companies. Rivian has been cutting costs, trimming staff, and pausing the construction of a new factory to increase efficiency and reduce capital spending. As of March, Rivian reported $7.86 billion in cash, cash equivalents, and short-term investments, with more than $9 billion in total liquidity.

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1. Nvidia Down for Third Day, Arm Joins Nasdaq 100: Market Domination Overtime

Nvidia's stock continued its decline for the third consecutive day, impacting the tech-heavy Nasdaq Composite, which fell over 190 points. Arm Holdings also joined the Nasdaq 100, adding to the index's volatility.

2. Paramount Plus Raising Prices Starting in August

Paramount Global announced a price increase for its streaming service Paramount+ starting August 20. Both ad-supported and ad-free tiers will see higher monthly fees, reflecting the company's strategy to boost revenue amid rising content costs.

3. Bitcoin Faces Downward Pressure as Mt. Gox Prepares for Repayments

Bitcoin's price is under pressure as the defunct exchange Mt. Gox plans to start repayments to creditors. Concerns over a potential increase in supply have led to a sharp drop in Bitcoin prices.

4. Airbus Shares Fall 9% as Company Cuts 2024 Guidance on Targets, Deliveries

Shares in Airbus fell sharply after the company announced a cut in its 2024 targets, including aircraft deliveries and earnings. The adjustment reflects ongoing supply chain issues and production challenges.

5. Ford Recalls Over 550,000 Pickup Trucks Due to Transmission Issue

Ford is recalling more than 550,000 F-150 pickup trucks in the U.S. due to a defect that can cause the transmission to unexpectedly downshift to first gear, posing a risk of accidents.

6. Microsoft Faces EU Antitrust Violations for Bundling Teams

Microsoft could face significant fines after the EU charged the company with antitrust violations for bundling its Teams app with Office 365. The case highlights ongoing regulatory scrutiny of big tech companies.

7. Tesla Recalls Cybertruck for Fourth Time Over Safety Issues

Tesla is issuing its fourth recall for the Cybertruck to address problems with trim pieces that can come loose and windshield wipers that can fail. The issues continue to plague the company's futuristic vehicle.

8. Amazon Prime Day 2024 Dates Announced: July 16-17

Amazon has announced that Prime Day 2024 will take place on July 16 and 17, offering "millions" of deals to its Prime members. The annual shopping event is expected to drive significant sales for the e-commerce giant.

9. Novo Nordisk's Semaglutide Approved for Long-term Weight Management in China

Novo Nordisk announced that its drug Semaglutide has been approved in China for long-term weight management, expanding the market for its obesity treatment amid rising global demand.

10. Volkswagen to Invest Up to $5 Billion in Rivian as Part of Tech Joint Venture

Volkswagen and Rivian have announced a joint venture that includes a potential $5 billion investment from VW. The partnership aims to develop shared EV architecture and software, bolstering Rivian's financial position and market competitiveness.

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Today's insights are courtesy of Block Advisors by H&R Block, trusted by millions of small business owners for their year-round small business expertise

Learn More ➔