Blue Wave Rattles Markets; CVS Splits Into Two Companies

Healthcare Practice & Business Deals

This week’s healthcare deal spotlight is dominated by a major structural breakup and a research finding on private equity’s footprint in hospice care — rather than traditional small-practice acquisitions.

CVS Health to Split Into Two Companies. CVS Health announced plans to separate into two independent publicly traded companies by 2028. One entity will combine the Aetna health insurance business with the Caremark pharmacy benefit manager. The other will house the company’s retail pharmacy operations. The move reverses years of vertical integration strategy. Experts note the split may not fully resolve conflicts of interest between Aetna and Caremark, which will remain under the same corporate roof in the new structure.

Private Equity Hospices Cost Medicare More, Study Finds. A new study found that Medicare spends nearly $1,000 more per stay at hospices owned by private equity firms compared with other providers. Researchers raised concern that PE-owned hospices may be driving inappropriate admissions in order to maximize reimbursement. The findings add to a growing body of scrutiny around private equity’s role in end-of-life care settings.

CMS Finalizes Deeper Medicare Physician Pay Cuts for 2027. The Centers for Medicare & Medicaid Services finalized sweeping changes to Medicare physician payment for 2027. The rule includes steeper pay cuts and shifts program emphasis from volume-based care toward prevention, primary care, and accountable care models. CMS also delayed a planned restriction on third-party remote patient monitoring vendors until 2029. The cuts will directly affect independent and small-group physician practices already operating on thin margins.

Global Markets & Macro

Markets entered a second week shaped by the Democratic midterm sweep, central bank moves, and a sharp rotation away from technology and AI-linked stocks.

Post-Midterm Market Rotation Hits Chipmakers. A broad rotation trade continued for a second day following the Democratic “blue wave.” Previously unloved sectors and economically sensitive stocks outperformed. Chipmakers lost ground as investors unwound crowded positions in the artificial intelligence trade. European stocks reached a fresh closing record high, extending gains driven by the same rotation and a strong earnings season on the continent.

Treasuries Rally on Hopes for Fiscal Restraint. US Treasuries posted a second consecutive day of gains. Investors bet that Democratic control of Congress will constrain the Trump administration’s tax and spending agenda. Reduced bond supply expectations drove yields lower. Wall Street positioned around the view that the election outcome would empower moderates and limit fiscal extremes.

Bank of England Raises Rates to 4%, Warns of Higher Inflation. The Bank of England raised its benchmark interest rate by a quarter point to 4%, voting 8-1 in favor of the move. The central bank warned that inflation is on track to approach 5% next year and signaled that another hike remains possible. One market strategist described the move as a likely “one and done” insurance hike, with the Monetary Policy Committee’s messaging not envisaging further moves in the near term.

Oil Rebounds From Two-Month Low. Brent crude recovered from a two-month low after tumbling nearly 9% in the prior session. Investors bet that the Democratic sweep could accelerate diplomatic efforts to end the conflict in the Middle East. Meanwhile, Russian subsidies paid to oil producers for keeping road fuels on the domestic market climbed to their highest level since 2022, increasing pressure on the Kremlin’s energy revenues.

China Copper Squeeze Intensifies. Copper buyers in China scrambled for physical metal as spot premiums soared. Supplies tightened sharply in the world’s largest consumer of the industrial metal. Beijing separately weighed issuing new diesel export quotas, balancing global supply needs against tight conditions in its own domestic fuel market.

What to Watch

The week ahead will test whether post-midterm market optimism holds as investors assess the real policy impact of Democratic congressional control. Watch for further Fed commentary on whether the BOE’s hawkish turn signals a renewed global tightening bias. In healthcare, the finalized Medicare physician pay cuts for 2027 will force many independent and small-group practices to revisit their financial models — and potentially accelerate sale or affiliation decisions heading into the new year. The CVS breakup timeline stretching to 2028 will also draw continued scrutiny over how insurers and PBMs structure their relationships going forward.

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