Member Briefing August 14, 2024
PPI = 2.2. Wholesale Inflation Measure Rose Less Than Expected
The producer price index, which measures selling prices that producers get for goods and services, increased 0.1% on the month, the Labor Department’s Bureau of Labor Statistics reported Tuesday. Excluding volatile food and energy components, the core PPI was flat. Economists surveyed by Dow Jones had been looking for an increase of 0.2% on both the all-items and the core readings. On a year-over-year basis, the headline PPI increased 2.2%, a sharp drop from the 2.7% reading in June.
The wholesale inflation reading was relatively tame despite a 0.6% jump in final demand goods prices, the biggest move higher since February and due primarily to a 1.9% surge in energy, including a 2.8% increase in gasoline. Countering the move was a 0.2% slide in services, the biggest move lower since March 2023, according to the BLS. Trade services prices fell 1.3% while margins for machinery and vehicles wholesaling tumbled 4.1%. An increase of 2.3% in portfolio management offset some of the decline in services prices.
NFIB Small Business Survey: Optimism Higher, Still Below Historical Average
The NFIB Small Business Optimism Index rose 2.2 points in July to 93.7, the highest reading since February 2022. However, this is the 31st consecutive month below the 50-year average of 98. Inflation remains the top issue among small business owners, with 25% reporting it as their single most important problem in operating their business, up four points from June. “Despite this increase in optimism, the road ahead remains tough for the nation’s small business owners,” said NFIB Chief Economist Bill Dunkelberg. “Cost pressures, especially labor costs, continue to plague small business operations, impacting their bottom line. Owners are heading towards unpredictable months ahead, not knowing how future economic conditions or government policies will impact them.” Key findings include:
- Seasonally adjusted, a net 33% reported raising compensation in July, down five points from June and the lowest reading since April 2021.
- A net 2% (seasonally adjusted) of owners plan inventory investment in the coming months, up four points from June.
- The net percent of owners expecting higher real sales volumes rose four points in July to a net negative 9% (seasonally adjusted), the highest reading of this year.
- The net percent of owners raising average selling prices fell five points from June to a seasonally adjusted net 22%.
- Seasonally adjusted, a net 24% plan price hikes in July (down two points). This is the lowest reading since April 2023.
- Thirty-eight percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, up one point from June.
Global Headlines
Middle East
- Israel And Hamas: The Latest News – The Guardian
- U.S. Crude Oil Trades Near A Three-Week High After Rally Fueled By Israel-Iran Tension - CNBC
- U.S. Efforts to Calm Mideast Fighting Face Critical Week - WSJ
- Tehran Laughs Off West’s Plea To Keep Cool - Politico
- Iran Rejects Pressure To 'Stand Down' From Israel Retaliation – NBC News
- Only Gaza Ceasefire Will Delay Retaliation, Say Iranian Officials - Reuters
- Netanyahu Spat With Defense Minister Shows Coalition Cracks – Newsweek
- Deception and a Gamble: How Ukrainian Troops Invaded Russia - NYT
- 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
- Clashes Near Ukraine Nuclear Plant Must End, IAEA Says - AP
- Ukraine's Surprise Incursion Leaves Putin Scrambling To Save Face — And His Territory – NBC News
- Putin Pulls Units Out Of Ukraine To Defend Russia, Kyiv Says - Politico
- US Overestimated Putin's 'Red Lines': Ex-Ambassador to Moscow - Newsweek
- Russia Calls Out Ukraine Allies At UN For Silence On Kursk Assault - Reuters
- Russian Army Desertions Are Surging, Court Records Indicate - Newsweek
- 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
- Workers Strike At BHP's Escondida, World's Largest Copper Mine - Reuters
- War Tears Apart Sudan’s Capital City - WSJ
- The Sleepy Czech Town Helping Europe Compete in the Global Chip War - Bloomberg
- Building From Scratch - Meet Nusantara, Indonesia's New Capital. - Marketplace
- Western Nations Take Measured Stance On Venezuela's Disputed Vote – NBC News
- Bangladesh Installs Interim Government After Authoritarian Toppled – The Dispatch
- Haiti's Child Death Toll Mounts As Security Mission Lags - Reuters
- Rising Pay, Falling Rates — Good News for UK Consumers - Bloomberg
- China's Aircraft Carrier Moves Into Pacific To Challenge US Primacy - Newsweek
- Banksy Frees The Animals At London Zoo In Final Installment Of Art Trail – France 24
Policy and Politics
White House Launches Broad New Regulatory Effort
The Biden administration on Monday unveiled a new, multi-agency regulatory initiative to target corporate practices that officials claim are designed to waste consumers’ time and needlessly burden them with red tape, in order to maximize profits. Dubbed the “Time is Money” initiative, the actions will make it easier for consumers to cancel subscriptions, get refunds, submit health-care and insurance forms online, and access high-quality customer service.
Among the new initiatives announced Monday are a series of Consumer Financial Protection Bureau rulemakings, that will target customer service “doom loops” and ineffective chatbots used by some financial institutions. Meanwhile, the Federal Communications Commission will launch a parallel inquiry into whether to expand the CFPB’s proposed customer service requirements to include phone, broadband and cable providers. The second FCC inquiry will consider adopting requirements similar to the Federal Trade Commission’s current “Click to Cancel” proposal. The FTC plan would require companies to make it as easy to cancel subscriptions and memberships as it is to sign up for them. The initiative also calls on health insurance companies to allow policyholders to submit claims online.
HUD Investing $100M to Spur Housing Construction
The Biden administration announced a $100 million investment Tuesday aimed at combating barriers to affordable housing construction. The funds will be made available via the Pathways to Removing Obstacles to Housing program, which offers grants to state and local governments, and other entities, as part of a larger effort “to identify and remove barriers to affordable housing production and preservation.” Some polling has signaled housing affordability could be a key issue for voters ahead of the pivotal November elections.
The program, which operates under the Department of Housing and Urban Development (HUD), said grantees can use the awards to craft and carry out housing policy plans and facilitate affordable housing production, among other efforts. The second round of the competition prioritizes “communities with acute need for affordable housing that have already demonstrated a commitment to overcoming local barriers, primarily by having enacted improved laws and regulations.”
The New York Times Will Stop Endorsing Candidates in New York Races
The New York Times editorial board will no longer issue endorsements in state elections, the publication's Opinion editor announced Monday. Editor Kathleen Kingsbury did not provide a specific reason for the change, simply saying "Opinion will continue to offer perspective on the races, candidates and issues at stake." She noted The Times remains “rooted in New York City." The change will take effect immediately, with the editorial board refraining from weighing in on this November's state congressional and Senate races. The board will continue to make endorsements in presidential elections, as it has since 1860, according to The Times.
Critics panned the Times' decision on social media, including New York-based journalists, progressive politicians and even former Times staffers. "What a terrible decision," Semafor editor-in-chief and former Times columnist Ben Smith reacted on X. "The Times edit board abdicating the only thing anyone actually, really listened to them on, and leaving NYC politics to be continue to drift along, more or less controlled by tiny interest groups." Others took swipes at the Gray Lady for ending their influential endorsements in New York races but maintaining their endorsements on a presidential level, which have all supported Democrats since 1960. "This is psychotic. The local endorsements were influential (and usually in a positive direction.) Nobody cares who the NYT endorses for president," Very Serious Substack writer Josh Barro said.
Health and Wellness
Mpox Declared Public Health Emergency In Africa
Mpox, the high infectious disease that used to be called monkeypox, has been declared a public health emergency in Africa by the continent’s top health body. Scientists from the Africa Centres for Disease Control and Prevention (Africa CDC) say they are alarmed by the speed at which a new strain of mpox has been spreading. Since the beginning of the year, more than 13,700 cases and 450 deaths have been recorded in the Democratic Republic of Congo. The virus, which can cause lesions across the whole body, has spread to other African countries, including Burundi, the Central African Republic (CAR) Kenya and Rwanda.
Africa CDC head Jean Kaseya warned that the disease could spiral out of control if immediate steps were not taken to contain it. “This declaration is not merely a formality. It is a clarion call to action. It is a recognition that we can no longer afford to be reactive. We must be proactive and aggressive in our efforts to contain and eliminate this threat," he said. Health chiefs outside Africa will also be monitoring the situation to assess the risk of the outbreak spreading further. On 29 July, the European Centre for Disease Prevention and Control said the risk from the mpox virus was "very low" in Europe.
Election 2024
- Trump and Musk, on X, Discuss Immigration and Shared Vision for U.S. - WSJ
- Trump Vs. Harris 2024 Polls: Harris Expands Lead In Latest Survey - Forbes
- No Tax on Tips: Embraced by Trump and Harris, Questioned by Tax Experts - Newsweek
- FBI Probing Trump Campaign Hack That Also Includes Attempt On Biden-Harris Campaign - Politico
- Trump or Harris? It’s a Tossup for Many CEOs - WSJ
- RFK Jr Denied NY Ballot Access Over 'False' Address, Judge Rules - BBC
- China’s Nightmare: A Second Trade War With Trump - WSJ
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Latest Polls - FiveThirtyEight
Industry News
Machine Tool Orders Rise, Still Lag Previous Year
U.S. machine shops and other manufacturers increased their orders for new capital equipment in June, up to $402.3 million, or 4.3% more than the May order level. But the new total lags the June 2023 order volume by -1.6%, and while it brings the year-to-date order volume to $2.2 billion, that figure trails the comparable January-June 2023 total by -10.7%. Although the total value for manufacturing orders in the first half of this year remains well behind 2023, the Assn. for Manufacturing Technology noted that the difference has narrowed in recent months.
But the Association also pointed to another trend: “While the value of orders maintained momentum in June 2024, with the average value increasing significantly, the number of units ordered for the month dropped to 1,471 units, the lowest since July 2023,” according to AMT. And it pointed to evidence that machine tool prices (according to the producer price index) has remained stable in recent months – meaning the higher USMTO value is based on fewer machines being ordered overall. AMT observed that the divergence between the order value and the unit total indicates “manufacturers are generally investing in more automated, task-specific solutions.”
Read more at American Machinist
Home Depot Expects Sales To Weaken As Consumers Grow More Cautious
Home Depot on Tuesday topped quarterly expectations but cautioned that sales will be weaker than expected in the back half of the year as high interest rates and consumer uncertainty dampen demand. The home improvement retailer said it now expects full-year comparable sales to decline by 3% to 4% compared with the prior fiscal year. It had previously expected comparable sales, a metric that takes out the impact of store openings and closures and other one-time factors, to decline about 1%.
In an interview with CNBC, Chief Financial Officer Richard McPhail said Home Depot has contended with consumers who have a “deferral mindset” since the middle of 2023. Interest rates have caused them to put off buying and selling homes and borrowing money for bigger projects, such as a kitchen renovation. Shoppers visited Home Depot’s stores and its website less frequently, and spent less when they did, during the quarter compared to the year-ago period. Customer transactions fell nearly 2% and average ticket dropped slightly to $88.90 from $90.07 in the year-ago quarter
Boeing Is in Crisis, Yet Airbus Is Struggling to Take Advantage.
When Christian Scherer took the job of running Airbus’s commercial aircraft division at the start of the year, the gig looked like a slam dunk. The plane maker had just smashed its record for annual orders, airlines were still clamoring for more jets and production was ramping up. The company’s only significant rival, Boeing, had been flung into a fresh and escalating crisis after a door-size panel blew off the side of a 737 midflight. Since then, Airbus has been dogged by delays, prompting the company to cut its annual delivery guidance and defer a long-heralded production target. Orders during the first half of the year were less than a third of the intake in the same period of 2023, and the company’s stock is now down more than 20% since it hit a record high in March.
It is a frustrating change in fortunes for the world’s biggest jet manufacturer, which was confident it could capitalize this year on a post pandemic surge in demand. Instead, Airbus is mired in supply-chain issues. “I thought we were going to be in a better place,” Scherer, a company lifer who for years has been focused on ramping up production, said in an interview. “There’s the whole future to prepare, but now there’s also the present to manage much more than we thought.”
J&J Gets Plaintiff Backing for $6.5 Billion Baby Powder Accord
Johnson & Johnson has cleared a key threshold of support for its proposed $6.5-billion settlement of tens of thousands of lawsuits alleging its baby powder and other talc products caused cancer, according to a Bloomberg report. More than 75% of claimants voted in favor of the proposal, according to Bloomberg, a hurdle J&J set for a third attempt at placing a subsidiary in bankruptcy protection to resolve the litigation.
J&J faces lawsuits from about 61,000 claimants who alleged that its baby powder and other talc products were contaminated with asbestos and caused ovarian and other cancers. J&J denies the allegations and has said that its products are safe. The company set the 75% vote percentage, matching a provision in U.S. bankruptcy law, as the benchmark to proceed with another bankruptcy bid, which now is expected in the near future. The deadline for casting votes was July 26. After being rebuffed twice by federal courts, the healthcare giant is attempting again to end the litigation in a so-called “Texas two-step” bankruptcy. The "two-step" maneuver involves offloading its talc liability onto a newly created subsidiary, which then declares Chapter 11. The goal is to use the proceeding to force all plaintiffs into one settlement – without requiring J&J itself to file bankruptcy.
Bank Of America Called Out For 100-Hour Work Weeks
The Wall Street Journal spoke to more than three dozen people familiar with the working conditions at Bank of America, including former and current investment bankers ranging from junior to executive level in offices around the world. Many described how superiors instruct junior bankers to ignore policies that limit working hours. The experiences clash with rules added a decade ago to protect bankers from being overworked, raising scrutiny of the bank’s work culture. The restrictions were put in place after another death—a Bank of America intern in London died of a seizure after working several all-nighters in a row.
A spokeswoman for Bank of America said that “our practices are clear and we expect all employees including managers to follow them. When we’ve learned of violations, disciplinary actions have been taken.” She also said that investment banking jobs at Bank of America are “sought after [and] challenging jobs.” She said the bank received roughly 500,000 applications for entry-level positions over the past four years, while turnover for associates is under 10%.
Portable Power Quality Meter Market Size Surges
In an era where reliable electricity is critical across sectors, portable power quality meters have emerged as essential tools for monitoring and maintaining electrical systems' stability and efficiency. The global portable power quality meters market is poised for substantial growth — anticipated to expand from $1.54 billion (U.S.) in 2023 to approximately $3.07 billion (U.S.) by 2032, according to a new report, “Global Portable Power Quality Meter Market Research Report,” recently released from Value Market Research. This product category includes handheld devices that help identify and diagnose issues such as voltage fluctuations, harmonics, power factor, and waveform distortions in electrical systems.
Based on the report’s analysis, portable power quality meters play a critical role in assessing and monitoring electrical parameters, ensuring the quality and reliability of power supply across various industries and applications. Factors driving this market growth include increasing awareness about energy efficiency, rising investments in smart grid infrastructure, and the escalating demand for reliable power quality assessment tools globally.
Learn More about the Council’s Power Quality task force
Why is Your Coffee So Expensive? Houthi Rebels And The EU.
Remember the good old days when you could pop into your local café for an espresso for just €1? Italians do. In Rome or Milan or Naples, the morning ritual would see workers hurry into their neighborhood bar and gulp down a €1 shot before setting off to their job, caffeinated to the hilt but barely poorer. And that was still the average price for a coffee as recently as the Covid pandemic. But lately the cherished habit has got more expensive. An espresso now goes for about €1.20 in Italy, much to the chagrin of the coffee-loving country’s caffeine addicts.
There are all sorts of reasons. Firstly, just normal inflation, which has made pretty much everything harder to afford as countries spent their way out of the pandemic and were then confronted with war in Ukraine pushing up energy costs and global supply chain problems. But there’s also been a perfect storm of other factors that have hit coffee where it hurts. Yemen’s Houthi rebels have been wreaking havoc in the Red Sea, targeting cargo ships. Increasingly, shipping has been rerouted around the Cape of Good Hope in South Africa. That means longer transport times and higher costs. policymakers in Brussels are playing their part in driving up costs with the stroke of a pen. EU rules to fight deforestation enter into force at the end of the year. Under the regulation on deforestation-free products, coffee-makers must certify that their production hasn’t contributed to loss of vegetation. Add the strength of the dollar, draught conditions other growers challenges and you have a perfect brew of added costs.
US Wind And Solar On Track To Overtake Coal This Year
Wind and solar generated more power than coal through the first seven months of the year, federal data shows, in a first for renewable resources. The milestone had been long expected due to a steady stream of coal plant retirements and the rapid growth of wind and solar. Last year, wind and solar outpaced coal through May before the fossil fuel eventually overtook the pair when power demand surged in the summer.
But the most recent statistics showed why wind and solar are on track in 2024 to exceed coal generation for an entire calendar year — with the renewable resources maintaining their lead through the heat of July. Coal generation usually declines in the spring months, due to falling power demand and seasonal plant maintenance, and picks up when electricity demand rises in the summer. wind and solar are posed to overtake coal on their own. Wind and Solar accounted for 16 percent of U.S. power generation through July, slightly more than coal’s share of the power generation market.
Read more at E&E News by Politico
The Panama Canal Traffic Jam, One Year On: What’s New in 2024?
This time last year, the Panama Canal was making headlines with its extended wait times and a large backlog of ships due to drought conditions. As for 2024, there have been several announcements and updates in recent weeks regarding water management and other operations at this crucial waterway.
- Booking Slot, Draft Increases - After reaching the low 20s late last year, daily transits are almost back to pre-drought levels. As of Aug. 5, the number of booking slots has gradually climbed to 35, according to the Panama Canal Authority’s Advisory To Shipping No. A-20-2024. One more booking slot would push the canal back to its normal daily average prior to the drought. In addition, the maximum authorized draft for ships traversing the Neopanamax Locks has been increased to 49 feet as of early August, according to Advisory To Shipping No. A-26-2024.
- New Reservoir? - After a recent ruling by the Panama Supreme Court, authorities for the Panama Canal spoke of a newfound possibility to build a water reservoir on the Indio River, according to the Associated Press. Panama Canal Authority Administrator Ricaurte Vásquez Morales estimated the project would take six years and cost around $1.6 billion.
- New Slot Allocation Method - Announced earlier this month through Advisory To Shipping No. A-25-2024, the Panama Canal will introduce a Long-Term Slot Allocation Method for Neopanamax ships. Booking slot packages with a specific number of weekly or monthly slots will be offered to various market segments. The packages will be announced on the Panama Canal website, and auctions will begin Sept. 2.