Member Briefing April 3, 2024
JOLTS: Job Openings Edge higher to 8.75 Million, Manufacturing Openings Decrease Slightly
The number of job openings on the last business day of February stood at 8.75 million, the US Bureau of Labor Statistics (BLS) reported in the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday. Over the month, the number of hires and total separations were little changed at 5.8 million and 5.6 million, respectively.
The number of manufacturing job openings in the U.S. decreased slightly in Februarya. There were 583,000 open positions in manufacturing in February, down from 596,000 in January. Job openings in durable goods manufacturing, however, rose, to 361,000 in February from 348,000 in January. This number was also higher than the number of openings in nondurable goods manufacturing for the month (221,000). The number of hires in manufacturing decreased as well. Manufacturers hired 330,000 workers in February, down from 383,000 in January and 435,000 a year earlier. The big picture: Job openings in the larger economy were little changed, coming in at around 8.8 million on the last business day of February.
June Fed Rate-Cut Odds Dip Below 50% After Strong ISM Data
Bond traders priced in less monetary policy easing by the Federal Reserve this year — and briefly set the odds of a first move in June to less than 50 per cent — after a gauge of US manufacturing activity showed expansion for the first time since 2022. The amount of Fed easing priced into swap contracts for this year dropped to fewer than 65 basis points — less than Fed policymakers themselves have forecast — after ISM manufacturing for March exceeded all estimates in Bloomberg’s survey of economists.
The ISM report “feeds into the narrative coming out of last week”, whereby the economy’s resilience enables the Fed “to be patient”, said Gregory Faranello, head of US rates trading and strategy for AmeriVet Securities. For the bond market, that means rates stay “higher for longer”. March employment data to be released Friday is expected to show the slowest pace of job creation in several months, though the US unemployment rate remains at historically low levels under 4 per cent.
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- Iran Vows Revenge on Israel After Damascus Consulate Attack – Politico
- Israel-Iran Conflict Threatens to Spill Into Open Warfare - WSJ
- Gaza War Has Caused $18.5 Billion in Infrastructure Damage, New Report Shows - Bloomberg
- UN Investigating Explosion that Wounded Three of its Personnel, Translator in Lebanon – The Hill
- In Gaza, Palestinians Risk Death in Desperate Rush for Aid – Reuters
- US Weighs Selling New Fighter Jets, Missiles and Guidance Kits to Israel - Politico
- World Central Kitchen Suspends Gaza Aid Operations After Workers Killed - WSJ
- Interactive Map- Israel’s Operation in Gaza – Institute for the Study of War
- Map – Tracking Hamas’ Attack on Israel – Live Universal Awareness Map
Ukraine
- Ukraine and Russia: The Latest News – The Guardian
- Ukrainian Village Scarred by Murder of Mayor and Her Family Prepares for Long War - WSJ
- US, NATO Preparing for 'All Contingencies' Amid Russia War Threat - Newsweek
- Germany to Support Ukraine With 180,000 Artillery Shells Via Czech Initiative – Politico
- Ukraine Lowers Army Draft Age to 25 to Generate More Fighting Power - Reuters
- Ukraine Attacks Shahed Drone Factory, Oil Refinery Deep Inside Russia – Politico
- Interactive Map: Assessed Control of Terrain in Ukraine – Institute for the Study of War
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Other Headlines
- Majority of ASEAN People Favor China Over U.S., Survey Finds – Nikkei Asia
- Haiti Needs Up to 5,000 Police to Help Tackle `Catastrophic’ Gang Violence, UN Expert Says - AP
- Turkey Election Result: Erdogan Suffers Historic Loss Against CHP Opposition - Bloomberg
- Extreme Drought in Southern Africa Leaves Millions Hungry - AP
- Havana Syndrome Evidence Suggests Russia May be Responsible for Mysterious Brain Injuries - CBS
- Herculean Feat in Paris Olympics: Make the Seine Safe to Swim - WSJ
- US Treasury's Yellen to Return to China, Emphasize Excess Capacity Threat - Reuters
- Botswana Threatens to Deport 20,000 Elephants to Germany – Politico
- China's Quiet Push Into Russia's Far East Puts Putin in a Pickle - Newsweek
Policy and Politics
Assemblymembers Want NY HEAT Act Included in State Budget
Members of the New York state Assembly on Tuesday urged the chamber’s speaker, Carl Heastie, and Gov. Kathy Hochul to include the NY HEAT Act, which aligns utility regulation with state climate justice and emission reduction targets, in the state budget. Proponents of the measure say it is intended to limit costs to customers as New York state transitions away from natural gas while protecting them from predatory practices by capping utility costs at 6% of income for low- and moderate-income New Yorkers to prevent utility companies from hiking rates. The state Senate passed the NY HEAT Act last year, but was never taken up in the Assembly. The Senate passed the measure again two weeks ago by a 40-22 vote.
The Business Council and other business groups oppose the HEAT Act because we are focused on assuring that the state’s transition to a lower emission economy is workable and affordable, and avoids imposing significant adverse impacts on the state’s economy, individual businesses and residents. For these reasons, we oppose adoption of the proposed “HEAT Act.”
Read more at NY State of Politics
Xi, Biden Hold 'Candid' Direct Talks, in 1st Call Since 2022
Chinese President Xi Jinping and his US counterpart Joe Biden spoke by phone on Tuesday, as the two countries sought to make headway in their limited areas of aligned interests amid heightening tensions between the two powers. “The two heads of state had a candid and in-depth exchange of views on Sino-US relations and issues of common concern to both sides,” state news agency Xinhua reported.
A senior official from the White House said ahead of the call that the leaders would discuss progress on the agreements reached during their November summit in California, which effectively hit the pause button on deteriorating bilateral relations. Cooperation on counter-narcotics, risk and safety issues related to artificial intelligence, the resumption of military-to-military communication channels and climate issues would be covered, she said. The official also said that Secretary of State Antony Blinken is scheduling a trip to China in coming weeks and Treasury Secretary Janet Yellen is also visiting the country this month. The two sides are also expecting a call between their top military officials “soon”.
Read more at South China Morning Post
Graduation Rate Fell Slightly for New York's ‘Covid’ Class of 2023
The dropout rate increased at some schools, and graduation rates ticked slightly downward statewide for the 2023 graduation class, according to data from the state Education Department. The state released data last month on the class of 2023, showing how many of the 200,000 students in 731 school districts graduated on time, how many earned honors for passing every Regents exam with at least a 90, and how many gave up on school after they turned 16.
This class of students were freshmen when COVID-19 hit in March 2020. If they passed a course as freshman and sophomores, the affiliated Regents exam was waived. When they were juniors, their U.S. History and Government exam was also canceled because a question could compound trauma for students after the mass shooting in Buffalo. State Education officials have refused to release the question, saying it could be used in future years. But the rest of their exams that year were given as scheduled, as were the exams their senior year, including their one remaining Regents exam requirement: the English exam.
Health and Wellness
Vaping Health Risks: Study Suggests Nearly 20% Increased Threat Of Heart Disease From E-Cigarette Use
Vapes containing nicotine may increase the risk of heart failure, according to a new study, adding on to previous research that found vaping may increase the risk of heart disease, worsen blood pressure and heart rate, and cause several lung-related health issues. Participants who used e-cigarettes (or vapes) containing nicotine at any point in their lives had a 19% higher chance of developing heart failure compared to those who never used vapes, according to a new study published Tuesday by the American College of Cardiology.
The researchers found the increased risk associated with vaping was more prominent in a type of heart failure called heart failure with preserved ejection fraction (HFpEF), which causes the heart muscle to become stiff and not properly fill with blood between each beat (the research did not find a similar connection to heart failure with reduced ejection fraction, another common form of heart failure). The researchers tracked 175,667 participants—over 60% female with an average age of 52—over the course of 45 months using health records from the National Institutes of Health. Of those participants, 3,242 developed heart failure within the 45-month period, and the study found no evidence to suggest other factors—including age, sex or whether they smoked cigarettes—impacted the study.
Election 2024
- Trump and Biden Win Primaries, but Voters Express Their Discontent- Politico
- The Real Question Over Trump’s VP Choice — Does it Matter? – The Hill
- Here’s Where the Polling Stands in a 3-Way Race with Biden, Trump and RFK Jr. – The Hill
- No Labels’ 2024 Presidential Effort Suffers More Setbacks - WSJ
- Real Clear Politics Latest GOP Primary Polls – Real Clear Politics
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Latest Polls - FiveThirtyEight
Industry News
Baltimore Harbor News
Bridge Collapse Could Fuel Cost of Reinsurance
Much of the insurance loss stemming from the collapse of Baltimore’s Francis Scott Key Bridge is expected to fall on the reinsurers that backstop insurers. It could also strengthen the industry’s case as they push for higher rates.
The collapse, caused by a collision with the containership Dali, could be the biggest event in marine insurance in years. Morningstar DBRS estimates that the total insured loss of the event may be $2 billion to $4 billion, depending on the coverage held by the Port of Baltimore. That insured loss would exceed the $1.5 billion incurred by the wreck of the cruise ship Costa Concordia in 2012.
More Headlines
- Francis Scott Key Bridge Collapse Live Updates - NBC
- East Coast Ports Expand Hours to Handle Baltimore Diversions – S&P
- One Week Since the Francis Scott Key Bridge Collapse – The Dispatch
- What Will Happen to the 21 Sailors Stranded on the Dali? - BBC
- McConnell: Federal Government Will Pay ‘Lion’s Share’ of Baltimore Bridge Repairs – The Hill
- Ocean Carriers Boost Trans-Pacific Capacity – S&P
- Channel Opens, 3D Sonar Images Released as Key Bridge Salvage Operations Begin - WBAL
It’s Cheaper to Rent Than Buy a Starter Home in Top 50 US Metros: Report
Due to rising mortgage rates and falling rents, it’s cheaper to rent than buy a starter home in every one of the country’s 50 largest metropolitan areas, according to new data from Realtor.com published Monday. February marked the seventh consecutive decline in rental prices for apartments and small homes, with rents falling by about 0.4 percent compared to a year before. That compared to a rise in prices for buying starter homes, on average $1,000, or 60 percent, higher than rents.
The difference was felt most in the country’s fastest growing cities. It was more than twice as expensive to buy a starter home than rent in Austin and Seattle, and nearly twice as much in Phoenix and San Francisco. In the Austin area, rents average $1,530, while buying a similar home would cost about $3,695 per month, given average mortgage rates. Rents fell by a massive 4.4 percent in Austin last year, one of the fastest rates of any major city as its housing market booms.
April is National Supply Chain Integrity Month
The National Counterintelligence and Security Center (NCSC) and its partners in government and industry launched the “National Supply Chain Integrity Month” awareness campaign on April 1. The goal of the campaign is to encourage organizations across the country not to gamble with supply chain security against foreign adversaries and other potential threats. Throughout 2023, threat actors—ranging from criminal elements and ransomware gangs to sophisticated hackers sponsored by nation states—conducted high-profile cyber campaigns that resulted in costly supply chain consequences.
Supply chain security has been a priority focus for public and private sector organizations seeking to enhance their resilience in the face of unpredictable supply chain shocks in recent years. These shocks are not only increasing in number but also in severity. For 2024, NCSC and its partners, including the U.S. Departments of Homeland Security, Defense, Energy, and Commerce, are asking organizations to bolster their Supply Chain Risk Management (SCRM) programs with an “A.C.E.” — Acquisition Security, Cyber Security, and Enterprise Security.
Read more at Material Handling & Logistics
Rework- Boeing Executives Failed to Lead, Waved Off Lean
In January, passengers, crew and the public were stunned by the latest high-profile incident involving a Boeing 737 MAX-9 jet. A door plug blew out during an Alaska Airlines at 16,000 feet. Thankfully (and perhaps luckily), nobody was killed in the incident. In the aftermath, the general public might ask, “Who screwed up?” Better questions include, “What might be going wrong with Boeing’s processes and operations?” We should also ask, “What’s wrong with Boeing’s culture and leadership?”
The lean experts who taught Boeing about the Toyota Production System certainly instructed the company to put quality first, even if that means stopping the line to address defects instead of passing them on. Decades later, did Boeing forget that lesson, or did they refuse to ever implement it? CEO Calhoun admitted that the amount of rework taking place in Boeing’s so-called “shadow factory” exceeded the initial labor hours, stating, “In our shadow factories, we put more hours into those airplanes than we do to produce it in the first place…that's a metric I know everybody understands.” That metric is understandable, but it’s completely flabbergasting to hear about any factory spending more time on rework than production.
Tesla’s Sales Drop, a Sign That Its Grip on the E.V. Market Is Slipping
Tesla posted its first annual drop in sales since the first year of the pandemic, as increased electric vehicle competition from Chinese and Western automakers ate into demand. CEO Elon Musk’s electric car company reported it built 433,000 vehicles but delivered only 387,000. That’s down from the 484,507 cars it delivered in the final three months of 2023, and it’s also down from the 422,875 vehicle sales in the first quarter of last year.
Tesla attributed the decline in volumes partially to the production ramp-up of the updated version of Model 3 at its Fremont factory and to factory shutdowns resulting from ships from China to Europe being diverted away from the Red Sea due to attacks there. It also cited a week long closure of its German factory due to an arson attack. But the increased competition in the EV space is a big factor in the decline in demand. In the fourth quarter, Tesla lost the title of the world’s best-selling maker of EVs to Chinese automaker BYD.
Toyota Reports 20% Jump in First-Quarter US Auto Sales
Toyota Motor North America reported an about 20% rise in first-quarter U.S. auto sales on Tuesday, helped by demand for its affordable sedans, crossovers SUVs and pickup trucks. TMNA, a unit of Japan's Toyota Motor Corp, sold 565,098 vehicles compared with 469,558 units a year earlier. The automaker has also been modernizing long-running nameplates such as its Land Cruiser, 4Runner, Tundra and Prius models.
Sales of RAV4 crossover surged 47.4% to 124,822 units from a year earlier, extending its run as TMNA's largest selling model. Sales of electrified vehicles, which includes hybrids, EVs and hyrdogen fuel cell vehicles, rose about 74% to 206,850 units.
DOE Allocates $62 Million to Reduce Costs for Battery Recycling
The U.S. Department of Energy (DOE) has allocated $62 million to help increase participation in consumer electronics battery recycling and improve the economics of battery recycling. The funding, made possible by the Bipartisan Infrastructure Law, will be used to support 17 projects, which were selected for the DOE’s Consumer Electronics Battery Recycling, Reprocessing, and Battery Collection funding opportunity.
Of the total funding, $14.4 million will be used to increase collection of end-of-life consumer electronics and stand-alone batteries for recycling, $40.1 million will be used to generate greater market demand for recycling consumer electronics batteries, and $7.2 million will be used to assist states and local governments in the initiation or enhancement of battery collection, recycling, and reprocessing.
Gold, Oil, And Interest Rates Rise
The market put more weight on the rise in the US ISM manufacturing survey than the downward revision to the manufacturing PMI and the unexpected back-to-back decline in construction spending. US rates shot up and lifted the greenback. The Dollar Index made a new high for the year, a little above 105, which had been anticipated by the new lows recorded by the Bannockburn World Currency Index (a GDP-weighted basket of the currencies of the 12 largest economies) last week. The two-year Treasury yield surged almost 9 basis points to settle above 4.7%, its highest in two weeks. It is slightly lower now.
10-year yield jumped 11 basis points, the most since January CPI was reported on February 13. It is slightly firmer today to approach the Q1 24 high (on March 18) near 4.35%. The dollar bloc and Scandis have been joined by sterling, posting minor gains against the dollar. With a soft manufacturing PMI and soft CPI due Thursday, the Swiss franc has been sold the hardest and is off around 0.5%. Most emerging market currencies are softer, but the Turkish lira is extending yesterday's recovery and the South African rand, and the Mexican peso are firmer.
Forbes Billionaires 2024: The Richest People In The World
There are now more billionaires than ever: 2,781 in all, 141 more than last year and 26 more than the record set in 2021. They’re richer than ever, worth $14.2 trillion in aggregate, up by $2 trillion from 2023 and $1.1 trillion above the previous record, also set in 2021. Two-thirds of the list’s members are worth more than a year ago; only one fourth are poorer. Much of the gains come from the top 20, who added a combined $700 billion in wealth since 2023.
The U.S. now boasts a record 813 billionaires worth a combined $5.7 trillion. China remains second, with 473 (including Hong Kong) worth $1.7 trillion, despite weak consumer spending and a real estate bust that helped wipe out some $300 billion in wealth. India, which has 200 billionaires (also a record), ranks third. To calculate net worths, we used stock prices and exchange rates from March 8, 2024. See below for the full list of the world’s billionaires and our methodology.