BCA says investors should fade the real estate rally By Investing.com


Investing.com — BCA Research told investors in a recent note to take a cautious approach toward the recent rally in the real estate sector, which has been the best-performing sector in the , with distressed sectors like Office REITs leading the charge. 

However, BCA analysts warn that this momentum may not be sustainable.

While real estate’s dividend yield appears attractive amid falling interest rates, BCA says several challenges that could impact the sector. 

“REITs will struggle if economic growth falters despite rate cuts,” the note explains. 

BCA explains that historically, REITs tend to outperform just before the first rate cut but consolidate gains shortly afterward, a pattern that investors should consider.

Fundamentally, BCA says the outlook for real estate is mixed. Although balance sheets remain healthy, the firm points out that “net operating income is decelerating” and margins have only returned to pre-pandemic levels. 

Additionally, pandemic-related disruptions are said to have created pockets of distress within the sector, which are now broadening.

BCA recommends investors underweight certain subsectors, including Industrial REITs, which are facing pressures from a manufacturing downturn and slower online retail sales, as well as Residential REITs, dominated by multifamily units grappling with overbuilding, slow rent growth, and rising delinquencies.

BCA adds that the Office REITs subsector also faces headwinds due to elevated vacancy rates and increasing distressed loans.

The research firm suggests an overweight position in Specialized REITs, which offer exposure to the digital economy.

“Underweight Real Estate over a tactical investment horizon,” says BCA. advises maintaining an underweight stance on real estate in the near term, expecting economic growth to slow. We expect economic growth to downshift, and even lower interest rates won’t benefit the sector in such conditions. Further, delinquency rates are rising and broadening across subsectors, which does not bode well for sector performance.”





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Citron’s Andrew Left asks judge to dismiss SEC’s fraud case By Reuters


(Reuters) – Citron Capital founder and short seller Andrew Left has asked a judge to dismiss the lawsuit by the U.S. Securities and Exchange Commission that has accused him of making millions of dollars by misleading investors with his social media comments.

Left’s lawyer, James Spertus, in a court filing argued that the SEC’s case “fails to state a claim because it neither alleges a cognizable theory of fraud nor alleges sufficient facts to support the theory alleged”.

The securities regulator and the U.S. Justice Department in July accused Left of manipulating the market and defrauding investors with misleading claims about his positions in multiple stocks, including Nvidia (NASDAQ:) and Tesla (NASDAQ:).

The federal authorities have said that Left used his social media platform and cable news appearances to promote what he said were his long or short trades, only to quickly reverse his positions, making as much as $20 million in the process.

The Federal judge in Los Angeles has set Left’s trial for Sept. 30, 2025. Left was slated to go on a trial in September this year.

© Reuters. FILE PHOTO: The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C., U.S., May 12, 2021.  REUTERS/Andrew Kelly/File Photo

Left, who has pleaded not guilty, has for more than a decade been among the most prominent of a cohort of “short activists” who say they bet against public companies on the basis they are over-valued or engaging in outright fraud.

Left’s lawyer Spertus and the U.S. SEC did not immediately respond to Reuters requests for comment.





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US port strike to end after operators reach tentative deal with workers for 62% raise-source By Reuters


© Reuters. Containers are stacked at the Portsmouth Marine Terminal (PMT), as port workers from the International Longshoremen's Association (ILA) participate in a strike, in Portsmouth, Virginia, U.S., October 2, 2024. REUTERS/Jose Luis Gonzalez

NEW YORK/WASHINGTON (Reuters) – Striking U.S. dock workers and port operators have reached a tentative agreement for a wage hike of around 62% that will end a three-day strike, a source familiar with the matter said.

Port work could resume as soon as Thursday evening, the person said.





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Tesla discontinues most affordable Model 3 variant in US, website shows By Reuters


(Reuters) – Tesla (NASDAQ:)’s most affordable Model 3 compact sedan was no longer available for order in the U.S., according to the EV maker’s website on Wednesday.

The Model 3 Standard Range Rear-Wheel Drive, priced at $38,990, uses lithium iron phosphate (LFP) battery cells sourced from China.

The U.S. recently announced higher tariffs on Chinese imports, including a 100% tariff on EVs and 25% on EV batteries and key minerals.

Additionally, vehicles that contain Chinese-made components, such as LFP battery cells, are ineligible for the $7,500 federal tax credit provided by the government.

© Reuters. FILE PHOTO: A Tesla logo is pictured on a car in the rain in the Manhattan borough of New York City, New York, U.S., May 5, 2021. REUTERS/Carlo Allegri/File Photo

Tesla’s Model 3 Long Range Rear-Wheel Drive is now its most affordable offering in the United States, priced at $42,490.

Earlier today, the EV maker reported a smaller-than-expected rise in third-quarter deliveries, indicating that incentives and financing deals have not sufficiently attracted customers.





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Restoring power to rural areas after hurricane Helene to take weeks, utilities say By Reuters


By Laila Kearney

(Reuters) -Restoring power to parts of the rural United States could take several weeks after Hurricane Helene’s high winds and flooding decimated stretches of the southeast electrical grid, utility officials said on Tuesday.

Helene, which barreled north after making landfall in Florida on Sept. 26, ripped away thousands of miles of transmission lines and power poles in hard-to-reach parts of the country, members of the National Rural Electric Cooperative Association said on a call.

“I’ve been in this business for 38 years, and I’ve never seen anything like it,” said Dennis Chastain, CEO of Georgia Electric Membership Corp. “It is devastation that’s hard to describe.”

Local electric cooperatives, which are owned by their customers, cover more than half of the country’s landscape.

Georgia’s transmission provider for the state’s electric co-ops had 166 distribution stations out during the peak of the storm. In South Carolina, Helene wiped out at least 2,000 power poles, said Michael Couick, who heads that state’s association of co-ops.

In an area around the Blue Ridge Mountains, energy workers are attempting to rebuild 7,300 miles (11,748 km) of transmission line, which is a length that could almost cover the diameter of earth, Couick said.

The rebuilding will require scaling mountainsides and drilling into solid rock, but only after accessing roads that may have been washed away by the storm’s flooding, Couick said.

“When we’re thinking about this rebuild, we’re thinking about some of the most remote territory in this country,” he added.

The southeast region’s biggest investor-owned electric utilities, including Duke Energy (NYSE:) and Southern Co (NYSE:), which shut coal and nuclear power plant units due to the storm, also had hefty rebuilding tasks in front of them.

Duke, the largest utility covering North Carolina and South Carolina, still has nearly 650,000 customers without power as of Tuesday after restoring electricity to 1.6 million homes and business in those states.

Investor-owned electric utilities have the largest share of customers in the country, with cooperatives and municipal utilities taking up the rest.

© Reuters. Power line poles lean after Tropical Storm Helene caused widespread damage to infrastructure, in Lake Lure, North Carolina, U.S. October 1, 2024. REUTERS/Jonathan Drake

“While it will be a long road to recovery, requiring significant rebuilding in many places, we will persist until the job is done,” said Scott Corwin, CEO of the American Public Power Association.

More than 1.4 million electric customers across 10 states were still without power five days after Helene touched down in Florida.





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23andMe CEO Wojcicki no longer open to third-party takeover proposals, filing shows By Reuters


(Reuters) – Genetic testing firm 23andMe Chief Executive Officer Anne Wojcicki would no longer be open to considering third-party takeover proposals for the company, a regulatory filing showed on Monday.

“It has become even clearer to me that the best path forward for the (company) is for me to take the company private,” Wojcicki said.

Wojcicki had said earlier this month she would consider third-party takeover proposals while continuing to evaluate and negotiate a deal.

In July, the CEO and co-founder proposed to acquire all outstanding shares of the firm not already owned by her or her affiliates for $0.40 each.

© Reuters. FILE PHOTO: Attendees purchase DNA kits at the 23andMe booth at the RootsTech annual genealogical event in Salt Lake City, Utah, U.S., February 28, 2019. REUTERS/George Frey/File Photo

The independent directors of the company resigned earlier this month saying they had not received a satisfactory take-private offer in the best interests of the non-affiliated shareholders.

23andMe, which provides DNA testing that helps users learn more about their ancestry, went public in 2021.





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California governor vetoes contentious AI safety bill By Reuters


By David Shepardson and Anna Tong

WASHINGTON/SAN FRANCISCO (Reuters) -California Governor Gavin Newsom on Sunday vetoed a hotly contested artificial intelligence safety bill after the tech industry raised objections, saying it could drive AI companies from the state and hinder innovation.

Newsom said the bill “does not take into account whether an AI system is deployed in high-risk environments, involves critical decision-making or the use of sensitive data” and would apply “stringent standards to even the most basic functions — so long as a large system deploys it.”

Newsom said he had asked leading experts on generative AI to help California “develop workable guardrails” that focus “on developing an empirical, science-based trajectory analysis.” He also ordered state agencies to expand their assessment of the risks from potential catastrophic events tied to AI use.

Generative AI – which can create text, photos and videos in response to open-ended prompts – has spurred excitement as well as fears it could make some jobs obsolete, upend elections and potentially overpower humans and have catastrophic effects.

The bill’s author, Democratic State Senator Scott Wiener, said legislation was necessary to protect the public before advances in AI become either unwieldy or uncontrollable. The AI industry is growing fast in California and some leaders questioned the future of these companies in the state if the bill became law.

Wiener said Sunday the veto makes California less safe and means “companies aiming to create an extremely powerful technology face no binding restrictions.” He added “voluntary commitments from industry are not enforceable and rarely work out well for the public.”

“We cannot afford to wait for a major catastrophe to occur before taking action to protect the public,” Newsom said, but added he did not agree “we must settle for a solution that is not informed by an empirical trajectory analysis of AI systems and capabilities.”

Newsom said he will work with the legislature on AI legislation during its next session. It comes as legislation in U.S. Congress to set safeguards has stalled and the Biden administration is advancing regulatory AI oversight proposals.

Newsom said “a California-only approach may well be warranted – especially absent federal action by Congress.”

Chamber of Progress, a tech industry coalition, praised Newsom’s veto saying “the California tech economy has always thrived on competition and openness.”

Among other things, the measure would have mandated safety testing for many of the most advanced AI models that cost more than $100 million to develop or those that require a defined amount of computing power. Developers of AI software operating in the state would have also needed to outline methods for turning off the AI models, effectively a kill switch.

The bill would have established a state entity to oversee the development of so-called “Frontier Models” that exceed the capabilities present in the most advanced existing models.

The bill faced strong opposition from a wide range of groups. Alphabet (NASDAQ:)’s Google, Microsoft-backed OpenAI and Meta Platforms (NASDAQ:), all of which are developing generative AI models, had expressed their concerns about the proposal.

Some Democrats in U.S. Congress, including Representative Nancy Pelosi, also opposed it. Proponents included Tesla (NASDAQ:) CEO Elon Musk, who also runs an AI firm called xAI. Amazon-backed Anthropic said the benefits to the bill likely outweigh the costs, though it added there were still some aspects that seem concerning or ambiguous.

© Reuters. Figurines with computers and smartphones are seen in front of the words

Newsom separately signed legislation requiring the state to assess potential threats posed by Generative AI to California’s critical infrastructure.

The state is analyzing energy infrastructure risks and previously convened power sector providers and will undertake the same risk assessment with water infrastructure providers in the coming year and later the communications sector, Newsom said.





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Why gene therapy for sickle cell is slow to catch on with patients By Reuters


By Deena Beasley

LOS ANGELES (Reuters) – Student Zoe Davis, 20, was just weeks into her junior year when she landed back in the hospital with severe sickle cell pain earlier this month. She is doing what she can to prevent the crippling attacks in her arms, legs and abdomen that are becoming more frequent.

She knows new gene therapies may provide long-term relief to some of the 100,000 Americans like her who suffer from sickle cell disease. But she’s holding off trying one.

“It is so new … I wanted to see more success stories before I committed to it,” said Davis, who is studying veterinary science at North Carolina Agricultural and Technical State University in Greensboro.

Her hesitation illustrates a common reason why take-up for the potentially life-changing treatments, which cost $2 million to $3 million in the U.S., is proving even slower than expected, interviews with half a dozen U.S. specialists and six sickle cell patients show.

Younger patients – weighing school schedules and reluctant to add more medical burden to their lives – have been less enthusiastic than predicted, said Dr. Leo Wang, hematologist-oncologist at City of Hope Children’s Cancer Center near Los Angeles.

“Some kids are just not interested,” he said, adding that patients between ages 20 and 40 are, but some have such severe disease that they are not good candidates.

The new one-time treatments, approved in the U.S. last December, have so far been used on around 100 people globally, including in clinical trials. They require chemotherapy, which raises the risk of cancer and can cause infertility.

Some patients say the time involved – up to a year – is a daunting prospect for anyone whose condition is not critical.

Worldwide, 8 million people are estimated to have sickle cell disease, an inherited disorder, according to the National Institutes of Health. Most of those in the U.S. are Black.

Sufferers’ red blood cells have an abnormal “sickle” shape that can block their flow through blood vessels, causing excruciating pain and sometimes leading to strokes, organ damage and premature death. The mutation that causes sickle cell is most prevalent in places where malaria is endemic: A single copy of the gene has been shown to protect against malaria infection.

By September, at least 30 people worldwide had begun a one-time gene therapy outside trials, according to the two drugmakers whose therapies were approved in America.

Both treatments involve a months-long process to remove a patient’s bone marrow stem cells and genetically modify them in a lab. Patients are given chemotherapy and admitted to hospital to be monitored for weeks after the cells are reinfused.

Doctors say use of the therapies could increase as more data emerges on safety and efficacy, but many patients are waiting on the sidelines – timing pregnancies, weighing the cost of fertility treatments or put off by the lengthy process. Others are seeking insurance approval: Hospitals need to confirm payments in advance.

Also, some younger patients’ disease is still under control with standard medicines. Older ones are liable to complications, hematologists said. Those with significant organ damage, a history of stroke or infections such as HIV or hepatitis may not be eligible.

“You have to be sick, but not too sick,” said Dr. Andrew Campbell, director of the Children’s National Comprehensive Sickle Cell Disease Program in Washington D.C.

‘NOT LIKE HOTCAKES’

The companies, doctors and analysts say that more than 80% of U.S. patients are not suitable for the therapies, which are approved only for those over 12 with a history of severe pain crises. Doctors and insurers have stricter criteria.

One of the drugmakers, Bluebird Bio (NASDAQ:), in August cut its forecast for use of all three of its gene therapy products this year to 85 at most, down from 105. Earlier this week, it said 10 patients had so far started its sickle cell regimen.

The other firm, Vertex Pharmaceuticals (NASDAQ:), said in August that 20 patients worldwide had begun its treatment process, but still called its therapy “a potential multi-billion dollar opportunity” for about 58,000 patients in the U.S., Europe, Saudi Arabia and Bahrain.

Bluebird’s shares are down about 64% this year at around 50 cents. Vertex has risen about 14% to around $463, on par with with gains in the Healthcare index.

Wall Street analysts, on average, expect sales of Vertex’s Casgevy to reach $500 million by 2026, according to LSEG data. No consensus forecast is available in the data for Bluebird’s treatment, Lyfgenia. This week the company said it would cut 25% of its workforce, mostly from research, to put more resources into selling its existing products.

Thomas Klima, Bluebird’s chief operating officer, told Reuters sickle cell patients are “excited” about Lyfgenia, but the payer approval process and steps to clinical readiness take longer than for a typical drug treatment.

Vertex COO Stuart Arbuckle said in an email that the company has been pleased with the response from payers, physicians and patients, but “this was always going to be a foundational year” for Casgevy.

Of other gene therapies approved in recent years, only one has reached blockbuster sales of over $1 billion a year: Novartis (SIX:)’ Zolgensma for spinal muscular atrophy in babies. Uptake of the rest, including one-time hemophilia therapies, has been slow.

The sickle cell therapies are “pretty awesome from a scientific standpoint,” said Chris Bardon, co-managing partner of biotech investment firm MPM BioImpact, which has a portfolio that includes gene therapy companies.

But she said they are not expected “to sell like hotcakes,” with early use seen mainly in patients with severe disease.

WEEKS OF PAIN

Debilitating sickle cell pains can strike any part of the body, but they most commonly occur in the hands, feet, chest, and back. They can last for a few hours to several weeks.

Existing treatments include blood transfusions, antibiotics for infections, opiates for severe pain and the generic drug hydroxyurea, an anti-cancer pill that helps red blood cells return to normal shape. Pfizer (NYSE:) said this week it was withdrawing its sickle cell disease treatment, Oxbryta, citing risks of a painful complication and deaths.

Until now, the only potential cure for sickle cell disease was a bone marrow transplant, but it is hard to find matched donors for that procedure, which also requires chemotherapy. There is a risk of transplant rejection.

People living with the disease are advised to avoid sudden temperature changes, alcohol or smoking, high altitudes or strenuous exertion, and to steer clear of infection risks. Also, stress can bring on an acute attack that lands them in the emergency room.

Student Davis said moving to college from her home in Virginia heightened the disease progression that many experience as they age. She takes hydroxyurea and folic acid daily, but still her pain crises frequently need hospital treatment.

Kayla Smith Owens, a 25-year-old sickle cell advocate who describes her pain as “constant,” was accepted in 2020 into a bone marrow transplant trial, but her donor fell through at the last minute.

She is interested in receiving gene therapy, which her doctors have recommended given that she is young with little to no organ damage. But her insurance coverage is uncertain.

“I turn 26 in November and will be dropped off of my mom’s insurance,” Smith Owens said. To avoid being cut off at that time, she and her medical team hope the insurer will grant an extension.

Health insurers that have outlined terms are adhering closely to them, said Jennifer Cameron, executive director for patient access at Children’s National Hospital, whose job entails communicating with insurers.

“If they say there are 10 points that the patient must meet, they are holding us to those 10 points,” she said, noting that insurers have turned down gene therapy coverage for some sickle cell patients whom doctors had recommended.

Vertex partnered with CRISPR Therapeuticsto develop its $2.2 million therapy Casgevy, the first U.S.-approved treatment using gene editing technology to trim faulty parts of a gene and allow patients to produce normal red blood cells.

Bluebird’s Lyfgenia uses a viral envelope to deliver a healthy hemoglobin-producing gene. The company sells the $3.1 million therapy only in the U.S.

After infusion with Casgevy, trial data showed that 36 out of 39 patients did not have a severe pain crisis for at least 12 consecutive months. Bluebird’s study showed that 32 out of 34 patients had not experienced a severe pain crisis after around three years.

FERTILITY BARRIER

Doctors say they are cautiously weighing the risks of the two gene therapies against the potential benefits.

If patients are doing well on current treatment, Dr. Michael DeBaun, director at Nashville’s Vanderbilt-Meharry Center of Excellence in Sickle Cell Disease, questioned the logic of recommending a new gene therapy used so far on so few people.

“You wouldn’t do that for cancer,” he said. “You would only offer that to people who had the most severe disease who were likely going to die.”

Dr. Mark Walters at UCSF Benioff Children’s Hospital in Oakland, California expects the therapies to initially be used for about 10% of sickle cell patients, noting the field is moving quickly as researchers aim for therapies that may not require chemo.

“The chemotherapy drug we use causes infertility in most,” Walters said.

A cycle of egg freezing can cost up to $15,000, and storage up to $500 a year, according to the non-profit Alliance for Fertility Preservation. Sperm banking can cost up to $1,000 with another $400 a year for storage, the group estimates.

Sickle cell patient Dominique Goodson, 38 and pregnant with her first child, said she would like to get a gene therapy a year or so after she gives birth in December, but she needs to make sure she can preserve fertility options for a second child.

Both Vertex and Bluebird have programs to help with payment for fertility services, but these are not available to patients in the federal government’s Medicaid plan for low-income individuals, which covers more than half of U.S. sickle cell patients.

Medicaid has proposed a pilot program starting next year that would include some fertility services, but Vertex is challenging the government’s policy in court.

© Reuters. Kayla Smith Owens and her grandfather, Chesapeake Beach, Maryland, August 14, 2024. REUTERS/Kent J Edwards

Goodson works with the non-profit Sickle Cell Consortium, focusing on the needs of the sickle cell community, and has participated in focus groups conducted by Vertex and Bluebird.

“I want to be able to live a normalish life … just being able to enjoy the simple things,” she said.





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Moody’s cuts Israel’s rating, warns of drop to ‘junk’ By Reuters


(Reuters) – Moody’s (NYSE:) on Friday downgraded Israel’s credit rating two notches to “Baa1” from “A2” and maintained a negative outlook amid escalation of the conflict in the region with Lebanese armed group Hezbollah.

“The key driver for the downgrade is our view that geopolitical risk has intensified significantly further, to very high levels, with material negative consequences for Israel’s creditworthiness in both the near and longer term,” Moody’s said.

The downgrade kept Israel’s rating three notches into investment grade. However, Moody’s warned that uncertainties over the country’s security and its longer-term economic growth prospects “are much higher than is typical at the Baa rating level.” A drop below that level would mean Israel would lose its investment grade rating.

“The ratings would likely be downgraded further, potentially by multiple notches, if the current heightened tensions with Hezbollah turned into a full-scale conflict,” Moody’s said.

© Reuters. FILE PHOTO: A view of Tel Aviv, amid the ongoing conflict in Gaza between Israel and Hamas and cross-border hostilities between Hezbollah and Israel, in Israel, September 24, 2024. REUTERS/Amir Cohen/File Photo

Typically, a loss of investment grade rating means a spike in the cost of servicing debt, and it could force some investors to sell their holdings – further pressuring lower the market price of Israel’s bonds.

Rating agency Fitch downgraded Israel’s credit rating to “A” from “A-plus” last month, and kept the rating outlook negative.





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US airlines cancel over 1,000 flights due to hurricane Helene By Reuters


(Reuters) – Airlines in the United States have canceled or delayed thousands of flights on Thursday, as a strengthening hurricane Helene is expected to make a landfall in the Florida big bend this evening.

A total of 1,038 flights were canceled and 1,672 delayed as of 11:59 A.M. ET, according to flight tracking website FlightAware.

Southwest Airlines (NYSE:) has canceled 201 flights, the most among the carriers, closely followed by American Airlines (NASDAQ:) and Delta Air Lines (NYSE:).

Officials have issued dire warnings and urged residents in coastal areas along the hurricane’s path to evacuate ahead of catastrophic winds and a potentially deadly storm surge.

© Reuters. A view of the Tropical Storm Helene from National Oceanic and Atmospheric Administration's (NOAA) airplane, September 25,2024 is seen in this screen grab obtained from social media video. Nick Underwood, NOAA/via REUTERS

Airports across impacted regions such as Tampa International, Orlando International and Fort Lauderdale International have also put out posts on X warning travelers of potential delays or cancellations.

American Airlines has issued a travel advisory for airports situated around Southeast U.S. and the Gulf of Mexico. JetBlue and Southwest Airlines, too, have issued similar advisories.





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