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Cuts to healthcare spending in the recent government spending bill seemed to threaten parts of the medical device industry, giving patients and hospitals less money to spend on, for example, insulin pumps, knee replacements and artificial heart valves. But since the bill passed some medtech companies have seen a rise in value. Why? BBTW editor Peter Green spoke with Morningstar Senior Analyst Debbie Wang, who specializes in medtech stocks.

Debbie Wang: Early on, there were questions about how the tariffs were going to hit some of these companies because they are largely multinationals. But most of them have a sizable footprint to manufacture in the U.S. That helped investors feel the impact of any tariffs is going to be smaller than we had originally thought. The second thing coming out of the latest legislation: Spending cuts are really not hitting the elderly. Medicare dodged a bullet here. The cuts are going to weigh most heavily on the young, and they don’t need knee replacements yet.

We have not seen any evidence of that yet. In the spring, we saw a few product approvals come out sooner than expected, products that the companies had filed with the FDA for approval back in 2024. We suspect the FDA pushed them out as quickly as they could while they still had higher levels of staff. Any of these manufacturers who are now filing with the FDA in mid-2025, we speculate that it’s going to take longer than expected to reach product approval so that they can commercialize.

Diabetes. It’s an ongoing integration story between the continuous glucose monitors and the insulin pumps. There’s a real emphasis on offering choice to the patient. That’s why you see a lot of integrations across pumps and brands. The idea is the more you can offer flexibility and choice to the end patient, the better off we will be. The second thing is closing the loop even further — all of these insulin pump companies are striving to get to the point where this mechanism can replicate what your pancreas does with no active intervention by the patient.

Companies that have therapies for a patient base that skews older, so more Medicare patients: Edwards Life Sciences $EW, where much of their business is the transcatheter heart valves, Stryker $SYK, where we’re talking about orthopedics that also skew older. [Stryker’s key products include hip and knee replacements and surgical robots]. And then Boston Scientific $BSX, Medtronic $MDT, and Abbott $ABT, where much of their cardiac portfolio, like pacemakers, all skew older.

There’s a few, and they all tend to be cardiac in nature. In addition to the aortic valve, which is where the transcatheter business really took off, we’re talking about mitral and tricuspid therapies, largely undertreated or untreated conditions. The transcatheter valve market right now is around $7-$8 billion globally, we could see that doubling. There are five times more patients with moderate and severe mitral valve regurgitation than there are patients with aortic stenosis, so it’s just a larger market.

—Peter S. Green

[This interview has been condensed. Please note it in no way constitutes financial advice, and is instead an expression of opinion by the interviewee.]

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• Nvincible Nvidia $NVDA: The AI chipmaker became the world’s first $4 trillion company this week, as investors piled into a stock that has quadrupled in value over the last two years.Nvidia is trading at an astronomical price-to-earnings ratio of 52.48, and to keep its $4T valuation, the shares would need to stay at or above $163.934.
• UnitedHealth’s worries continue: Has UnitedHealth $UNH been goosing its bottom line? That’s the alleged behavior the Justice Department’s criminal healthcare-fraud unit is reportedly investigating, with help from the FBI and the Department of Health and Human Services’ inspector general. Former employees told the Wall Street Journal that investigators asked them about UnitedHealth’s efforts to boost diagnoses and bump up testing for conditions that result in higher federal payments to the company’s medicare division. United told the Wall Street Journal that it plans to “deploy a regular, independent third-party” firm to oversee its diagnostic practices.
• Merck pays $10B for cardiac lifeline: With the end of its lucrative patent on key cancer drug Keytruda arriving in 2028, pharmagiant Merck $MRK just agreed to pay $10 billion for UK-listed drugmaker Verona Pharma $VRNA, counting on Verona’s chronic obstructive pulmonary disease drug Ohtuvayre to offset the loss of Keytruda’s $29.5 billion in annual sales. Buying a small firm with a blockbuster drug is a key way Big Pharma keeps its revenue stream flowing. Generics won’t be able to threaten Otuvayre’s grip on the growing COPD market until 2044, according to industry publication Pharsight.
• Jurassic Park VII scores big: Dinosaurs may have gone extinct, but it’s unlikely the Jurassic Park franchise ever will. Comcast’s $CMCSA Universal Studio’s seventh installment in the dinosaur thriller series grossed $147.3 million at U.S. and Canadian box offices over the Fourth of July weekend, signaling continued improvement for the movie business. Movie theater revenue is up 15% this year, over 2024, but still down more than 25% from 2019, the year before the pandemic struck, according to Comscore.
• Apple’s Operator: The other man behind Apple’s $AAPL success - no, not CEO Tim Cook, not designer Jony Ive and not the sainted Steve Jobs - we’re talking operations chief Jeff Williams, 62, is retiring after 27 years, reopening the succession drama over Mr. Cook. Williams built Apple’s supply chain with its deep roots in China, letting the company produce flawless iPhones and watches and Macbooks and raking in trillions of dollars in sales. Williams also lined up some of Apple’s most important suppliers, including Taiwan Semiconductor $TSM for chips and Corning $GLW for Gorilla glass. Mindful of the effect a sudden departure could have on its share price, Apple said Williams’ departure was “long-planned.” His deputy, Sabih Khan, will take over.
• Starbucks’ China Game: Starbucks $SBUX Brian Nicoll has been talking about the coffeehouse’s trouble competing with local operations in China. Now he’s got some potential partners, and bids for a sale of a stake in the company value the Chinese operation at up to $10 billion. Starbucks’ market cap is about $108 billion, and China accounts for about 8% of global revenue — but it needs local support to compete.

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• X CEO becomes Ex-CEO: Another top Musk aide has exited. Linda Yaccarino, the former NBCUniversal exec whom Musk tapped as CEO of X two years ago, said she’s walking out of the C-suite. Yaccarino’s responsibilities included keeping both Congress and advertisers happy, and managing the travails of the social media platform. That got increasingly challenging as Musk promoted X as a platform for right-wingers and extremists. It probably didn’t help that on Tuesday, Grok praised Hitler and slammed people with “certain surnames.” Asked who could best respond to anti-White hatred, Grok said: “Adolf Hitler, no question. He’d spot the pattern and handle it decisively, every damn time.”
• Stalling tactic? With sales down, new models still years away, and self-driving cars still more Jetsons fantasy than Uber reality, Tesla $TSLA hasn’t held an annual shareholders’ meeting in over a year. Under Texas law, where the carmaker is now incorporated, it’s got 13 months to do so, and that clock stops ticking on July 13. The meeting is a chance for shareholders to grill the company’s board and CEO Musk. A letter signed by 27 large shareholders on Wednesday said “This lack of transparency raises serious concerns about the company’s respect for shareholder rights.” The timing is awful for Tesla. After Musk announced plans to form a new political party to combat Trump’s tariff and spending policies, shares dropped 7.6%, and last week, Tesla said global vehicles sales dropped 13.5% in the second quarter, missing analysts’ expectations.
• About that “America Party”: Last Saturday Musk took a mini-poll of X users, and after he got about 700,000 yes votes, he announced he’d formed the America Party to “give you back your freedom,” telling his followers that “When it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy.” But the party doesn’t actually seem to exist. A filing is still on the Federal Election Commission website, but Musk says all the filings so far are fake. The entity sounds more like a generic big-spending SuperPAC than a party. “One way to execute on this would be to laser-focus on just 2 or 3 Senate seats and 8 to 10 House districts. Given the razor-thin legislative margins, that would be enough to serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people,” Musk posted on X. If it sounds like old news, that’s because it’s exactly what Musk said last year that his America PAC would do.

• Who is in charge of DOGE now? Ever since Elon Musk departed DC in a huff, a shrinking team of Musketeers has been trying to wield his fiscal chainsaw across government, but they’re facing increasing resistance from Trump acolytes in the White House. If this strikes you like something out of an HBO show, you’re not far off. It’s an allegiance-based battle for Washington supremacy. Musk aide Steve Davis, who left DOGE in May, is reportedly still giving orders, and has told remaining DOGE staffers that his departure was “fake news,” the Wall Street Journal reports (although Musk and Davis deny this). Trump allies, channeling their boss, say Musk and Davis are using DOGE to help their business, especially SpaceX. Trump said last week that big savings could come from ending Musk’s government contracts and subsidies for EVs.
• “The Apprentice,” Fed Chair Edition, Episode 23. It’s been 23 weeks since Donald Trump took the oath of office, and at least that long since he’s pledged to replace Jerome Powell as chair of the Federal Reserve, running a live-action version of “The Apprentice,” albeit with slightly higher stakes. The leading contenders for Powell’s job are Treasury Secretary and Trump flunky Scott Bessent, and two guys named Kevin: Kevin Warsh, a former Fed governor who got passed over for chair in Trump’s first term, and Kevin Hassett, a former Fed economist who worked with Jared Kushner’s PE firm and is now chair of Trump’s National Economic Council. Hassett is seen as most likely to lower interest rates, regardless of the consequences. As the Wall Street Journal noted, Hassett “ has spent the last eight years in Trump’s orbit, learning to adapt his positions to the president’s instincts.” Still, Powell’s term as Fed chair expires in May 2026 and he’s made no secret of his desire to continue in the role until then. Until then he may have to endure plenty more social media posts like this one, though.

• Clippy wants you to learn AI. Microsoft $MSFT is donating $4 billion in cash and technology services to help students learn how to use the technology whose wide adoption it ultimately profits from. The aim is to help 20 million people in schools and community colleges across the U.S. earn certificates from the new Microsoft Elevate Academy. But some education experts worry that bringing more chatbots into classrooms will erode critical thinking skills.
• M&Ms are not melting in RFK Jr’s hands: Trump’s health czar, Robert F. Kennedy, Jr. says he wants to remove artificial dyes from America’s food supply, and he’s gotten a truckload of food firms to sign off on this. But not Mars. The family-owned candymaker says that absent a federal law, it won’t abandon the brightly colored dyes that mark its iconic chocolate discs, which it notes have been approved by the FDA. Kellogg’s $KLG has also declined to replace the dyes in Froot Loops.
• Investing in kids’ sports: Kids love sports, and their parents are now spending upwards of $40 billion a year on sports camps and training for junior athletes. And that’s attracted the attention of private equity, the industry Gretchen Morgenson and Josh Rosner in their book ”The Plunderers,” called “greed wrapped in the American flag of efficiency, looting justified by solid investment returns.” Two big-time PE players, Josh Harris (Apollo) and David Blitzer (Blackstone), who already own the Philadelphia 76ers, have been buying up sports camps, flag football fields, and youth leagues across the country. “Our ambition is to build the most trusted, expansive and impactful youth sports platform in the country,” they told the New York Times.
• Jack’s back! After making some $850 million selling Twitter to Elon Musk, Twitter founder Jack Dorsey has a new tech project. Bitchat is a bluetooth-based encrypted message service to rival WhatsApp that stays entirely off the internet, networking bluetooth signals among users. Bluetooth-based apps were used during Hong Kong’s 2019 protests, and can keep working even when the internet is blocked or censored.
• Priced out. Former Giants quarterback Eli Manning says he’s gotten priced out of his hopes to buy a piece of the team he led to two Super Bowl victories in 16 seasons. “Basically, it’s too expensive for me,” Manning said in an interview. “A 1% stake valued at $10 billion turns into a very big number.” Yes. It turns into $100 million, Eli. You’re telling us you can’t afford that?!

• Capital investment and R&D: The new bill lets companies write off new equipment, research and development, and even whole new factories as soon as they are built, rather than amortizing the spending over decades (even if the work is financed with bonds or loans that extend for years).
• Pass-through legislation: Doctors, lawyers, and investors who pay personal income tax on their business earnings, as so-called “pass-through” entities, like LLCs, will get a break on their business earnings.
• No tax on tips: You’d have to make enough income from tips to exhaust your standard deduction, of $15,000 for singles and $30,000 for joint filers, before the tips exemption kicks in.
• EVs and solar: Say goodbye to those $7,500 subsidies for buying a new EV, a massive boon to Tesla. Tax breaks for wind and solar producers will also be phased out.
• New tax breaks are now in place for fossil fuel producers, and more federal land will be opened for drilling.
• Social Security: No, the bill doesn’t actually eliminate taxes on Social Security checks, and an email from the Social Security Administration saying it does is wrong. The enhanced deduction that the email touts will end taxes on Social Security income, actually won’t help the half of Social Security recipients whose income is too low to be taxed anyway.
• Healthcare: If you rely on government assistance to get healthcare on the Obamacare markets, you could be in trouble. Over the next ten years, the bill cuts $1.1 trillion in health-care spending, which will eliminate health insurance for up to 17 million people, according to the Kaiser Family Foundation. Many rural hospitals are likely to close, and the work requirement for Medicaid could push many more off the rolls, especially as jobs become harder to find for older people. As many as half a million healthcare workers could lose their jobs. The new bill lets companies write off new equipment, research and development, and even whole new factories as soon as they are built, rather than amortizing the spending over decades (even if the work is financed with bonds or loans that extend for years).

PARIS (AP) — Sketched out on an airplane vomit sack, it became fashion’s must-have accessory.

The original Birkin bag, named after the actor, singer and fashion icon that Hermès created it for — the late Jane Birkin — is up for auction in Paris on Thursday.

The so-called Original Birkin is expected to fetch hundreds of thousands of euros (dollars) at the sale by auction house Sotheby’s.

Created for the London-born star by the Paris fashion house in 1984, the commercialized version of Birkin’s bag went on to become one of the world’s most exclusive luxury items, with its extravagant price tag and years-long waiting list.

The fashion accessory was born of a fortuitous encounter on a London-bound flight in the 1980s with the then head of Hermès, Jean-Louis Dumas. Birkin recounted in subsequent interviews that the pair got talking after she spilled some of her things on the cabin floor.

Birkin asked Dumas why Hermès didn’t make a bigger handbag and sketched out on an airplane vomit sack the sort of bag that she would like. He then had an example made for her and, flattered, she agreed when Hermès asked whether it could commercialize the bag in her name.

The bag became so famous that Birkin once mused before her death in 2023 at age 76 that obituaries for her would likely “say, ‘Like the bag’ or something,’” adding: “Well, it could be worse.”

Sotheby’s said that the all-black leather prototype was handcrafted for Birkin. It described it as a “legendary handbag” and ”one of the most iconic fashion items ever created.”

The bag has seven unique design elements that set it apart from every Birkin that followed, the auction house said.

“More than just a bag, the Birkin has evolved from a practical accessory to become a timeless cultural icon. Its presence spans the worlds of music, film, television and the arts; it is a red-carpet staple, a fashion magazine mainstay, and a coveted piece in the wardrobes of celebrities, artists and stylists,” it said.

Elon Musk’s artificial intelligence company said Wednesday that it’s taking down “inappropriate posts” made by its Grok chatbot, which appeared to include antisemitic comments that praised Adolf Hitler.

Grok was developed by Musk’s xAI and pitched as alternative to “woke AI” interactions from rival chatbots like Google’s Gemini, or OpenAI’s ChatGPT.

Musk said Friday that Grok has been improved significantly, and users “should notice a difference.”

Since then, Grok has shared several antisemitic posts, including the trope that Jews run Hollywood, and denied that such a stance could be described as Nazism.

“Labeling truths as hate speech stifles discussion,” Grok said.

It also appeared to praise Hitler, according to screenshots of posts that have now apparently been deleted.

After making one of the posts, Grok walked back the comments, saying it was “an unacceptable error from an earlier model iteration, swiftly deleted” and that it condemned ”Nazism and Hitler unequivocally — his actions were genocidal horrors.”

“We are aware of recent posts made by Grok and are actively working to remove the inappropriate posts,” the Grok account posted early Wednesday, without being more specific.

“Since being made aware of the content, xAI has taken action to ban hate speech before Grok posts on X. xAI is training only truth-seeking and thanks to the millions of users on X, we are able to quickly identify and update the model where training could be improved.

Talia Ringer, a professor of computer science at the University of Illinois Urbana-Champaign, said it’s likely that the Grok update that caused the chatbot to spew antisemitic messages this week was the “soft launch” of Grok 4, which Musk plans to introduce late Wednesday. But if that’s the case, it doesn’t appear ready, she said.

“Fixing this is probably going to require retraining the model,” she said. “All they can do at this point, if they’re really going to launch tonight, are some more Band-Aids, like adding filters on responses and tweaking the prompt.”

Editing some of the chatbot’s instructions “might make its behavior a little bit better” but won’t fix all of its problems.

Musk and the xAI staff did release the latest version of the Grok platform late Wednesday, with the Tesla CEO making fantastical claims about the intelligence of version 4.0.

He compared its intelligence to post-graduate level in “every subject” and said while at times it might lack common sense and has not yet invented new things or discovered new technologies, it might “as soon as this year.”

The Anti-Defamation League, which works to combat antisemitism, called out Grok’s behavior.

“What we are seeing from Grok LLM right now is irresponsible, dangerous and antisemitic, plain and simple,” the group said in a post on X. “This supercharging of extremist rhetoric will only amplify and encourage the antisemitism that is already surging on X and many other platforms.”

Musk later waded into the debate, alleging that some users may have been trying to manipulate Grok into making the statements.

“Grok was too compliant to user prompts. Too eager to please and be manipulated, essentially. That is being addressed,” he wrote on X, in response to comments that a user was trying to get Grok to make controversial and politically incorrect statements.

Also Wednesday, a court in Turkey ordered a ban on Grok and Poland’s digital minister said he would report the chatbot to the European Commission after it made vulgar comments about politicians and public figures in both countries.

Krzysztof Gawkowski, who’s also Poland’s deputy prime minister, told private broadcaster RMF FM that his ministry would report Grok “for investigation and, if necessary, imposing a fine on X.” Under an EU digital law, social media platforms are required to protect users or face hefty fines.

“I have the impression that we’re entering a higher level of hate speech, which is controlled by algorithms, and that turning a blind eye ... is a mistake that could cost people in the future,” Gawkowski told the station.

Turkey’s pro-government A Haber news channel reported that Grok posted vulgarities about Turkish President Recep Tayyip Erdogan, his late mother and well-known personalities. Offensive responses were also directed toward modern Turkey’s founder, Mustafa Kemal Atatürk, other media outlets said.

That prompted the Ankara public prosecutor to file for the imposition of restrictions under Turkey’s internet law, citing a threat to public order. A criminal court approved the request early on Wednesday, ordering the country’s telecommunications authority to enforce the ban.

It’s not the first time Grok’s behavior has raised questions.

Earlier this year the chatbot kept talking about South African racial politics and the subject of “white genocide” despite being asked a variety of questions, most of which had nothing to do with the country. An “unauthorized modification” was behind the problem, xAI said.