Member Briefing August 19, 2024
Empire State Manufacturing Survey – ‘Modest Decline’ in Activity
Manufacturing activity continued to decline in New York State, according to the August survey with the general business conditions index coming in at -4.7 and the new orders index falling seven points to -7.9, pointing to a decline in orders, while the shipments index fell to around zero, suggesting shipments were flat.
- The inventories index fell to -10.6, indicating that inventories moved lower.
- The delivery times index remained below zero at -3.2, suggesting that delivery times continued to shorten.
- The supply availability index came in at -2.1, a sign that supply availability was slightly lower.
- The index for number of employees was little changed at -6.7, pointing to another month of employment reductions.
- The average workweek index dropped eighteen points to -17.8, signaling a sharp decline in hours worked.
- The prices paid index edged down three points to 23.4, indicating a slight moderation in input price increases.
- The prices received index edged up two points but remained low at 8.5, indicating that selling price increases were still modest.
- The index for future business conditions came in at 22.9, with 45 percent of respondents expecting conditions to improve over the next six months.
- The outlook for employment growth picked up, and capital spending plans, while sluggish, firmed somewhat compared to last month.
Retail Sales Soar Past Wall Street Estimates In July
Retail sales rose 1% in July. Economists had expected a 0.4% increase in spending, according to Bloomberg data. Meanwhile, retail sales in June were revised lower to a 0.2% decline, from a prior reading that showed sales were flat from the month, according to Census Bureau data. July sales, excluding auto and gas, rose 0.4%, above consensus estimates for a 0.2% increase. The place where sales picked up the most was the largest category: auto dealers. A slump in June set up July for a solid gain of 3.6%. This is made somewhat more impressive by the fact that the CPI report showed auto prices are actually down over the past year.
Less than two weeks ago, broad-based weakness in the July jobs report sent global financial markets into a tailspin and re-ignited fears of U.S. recession. In our August forecast update, we described how despite it being somewhat counter-intuitive, recent consumer spending numbers have come in stronger even as labor market indicators have come in weaker. Today's retail sales report is the latest development on this theme. That spending momentum in July positions spending for a solid third quarter.
US Industrial Production Contracts Sharply In July - Impacted by Hurricane Beryl
US industrial production fell sharply in July, the Federal Reserve said last Thursday, defying market expectations of a small rise, due to a larger-than-expected impact from Hurricane Beryl. Total industrial output contracted by 0.6 percent in July from a month earlier, when it rose by a revised figure of 0.3 percent, the US central bank said in a statement. This was sharply below market expectations of a 0.1 percent increase, according to Briefing.com.
The Fed said industrial production had been held down by the early "July shutdowns concentrated in the petrochemical and related industries due to Hurricane Beryl," which came ashore in Texas. The manufacturing sector experienced a 0.3 percent decline due to a plunge of almost eight percent in the index for motor vehicles and parts. Excluding this component, the manufacturing index actually increased by 0.3 percent, the Fed said. Meanwhile, the mining index was unchanged, and the utilities index slumped by 3.7 percent.
Global Headlines
Middle East
- Israel And Hamas: The Latest News – The Guardian
- Risk Of Regional War Hangs Over Gaza Ceasefire Talks - BBC
- Gaza Cease-Fire Talks Proceed in Face of Obstacles - WSJ
- US Official Says Mideast Mediators Are Preparing To Implement Cease-Fire Deal Before Final Agreement - AP
- Settler rampage in West Bank sparks rare condemnation from Israeli leaders - VOA
- Blinken To Arrive In Israel To Push Cease-Fire Deal Amid Doubts Of Success – Washington Post
- Families Of Hostages In Gaza Hope Cease-Fire Talks Will End Their Nightmare - AP
- How Israel Killed a Ghost - 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
- Russia Denies Report About Indirect Talks With Ukraine - Reuters
- Ukraine Incursion Destroys Key Russian Bridge - BBC
- As Ukraine Invades Russia, Kyiv’s Troops Are in Trouble on the Eastern Front - WSJ
- As Kyiv Makes Gains In Kursk, Russia Strikes Back In Donetsk - Politico
- Ukrainian Officials Urge Civilians To Evacuate Eastern City Of Pokrovsk As Russian Troops Close In - AP
- 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
- Volcano Erupts In Russia After 7.0-Magnitude Earthquake – The Hill
- Paetongtarn Shinawatra Elected Youngest Thai Pm – Reuters
- Macron Convenes French Party Leaders For August 23 Talks Aimed At Forming A Government – France 24
- Phased Shutdown Of Canada’s Freight Rail Network Ahead Of A Potential Work Stoppage Will Reach Into U.S. Operations - WSJ
- Protests Grow In India Over The Rape And Killing Of A Doctor At A State-Run Hospital - AP
- First Case Of More Dangerous Mpox Found Outside Africa - BBC
- Turkish Mps Brawl During Debate On Jailed Opposition Lawmaker - VOA
- Argentina’s Milei Finds It Hard to Decouple From China - WSJ
- ‘Humanitarian Aid In Sudan Is Constantly Being Blocked By All The Belligerents’ – France 24
Policy and Politics
Medicare Negotiated Lower Prices for These 10 Drugs
The U.S. government negotiated lower prices for medicines for the first time, a turning point in efforts to rein in heavy healthcare costs. After talks with pharmaceutical companies, the federal government released the new prices it will pay for 10 prescription drugs. The drugs, for serious conditions including cancer, diabetes and blood clots cost the government more than $50 billion a year altogether. The lower prices should save Medicare, the government’s health insurance program for older people, billions of dollars. Yet they might not translate into much savings for many seniors.
Drugmakers involved in the negotiations have described the new prices as manageable, suggesting that the government didn’t cut as much as the industry had feared. Lowering drug prices through negotiations is a milestone in years of efforts to give Medicare, the country’s biggest purchaser of prescription medicines, a power that private health plans have long deployed to keep a lid on rising drug costs. Among the medicines now set to cost the U.S. less following negotiations are Bristol-Myers Squibb’s blood thinner Eliquis, which will be priced at $231, down from $594 list price for a month’s supply. Likewise, Merck & Co.’s Januvia will be priced at $113, down 80% from its current list price of $573 for a month’s supply of the diabetes drug.
Read More, see the list of all 10 drugs at the WSJ
Hochul’s Ambitious AI Plans May Threaten State’s Climate Goals
As part of the state budget, Gov. Kathy Hochul touted the inclusion of the Empire AI Consortium, her plan to bring artificial intelligence research to universities in New York and a supercomputing center to the University at Buffalo. The goal: to make the state a national and global leader in the world of AI research and development. With New York already lagging behind on hitting its ambitious environmental benchmarks – like reducing carbon emissions by 40% by 2030 – and major renewable energy projects stalled or scrapped, the introduction of a technology as energy-intensive as AI stands to further threaten the state’s climate goals.
Tech-based economic development projects in New York are already responsible for significant burdens on the state’s grid. According to a July report from the New York Independent System Operator, which operates the state’s grid system, electricity demand is expected to increase from 50% to 90% over roughly the next two decades. That increased demand will be driven by two major sectors: the electrification of transportation and housing, and energy-intensive economic development projects.
Global Government Debt Has Hit $91 Trillion, $35 Trillion from the US. How Big (or Far) is That?
Global debt hit a milestone recently. If you add up the debt of all of the countries on Earth, you end up with a stunning $91 trillion. More than a third of that comes from one country: the United States. This nation’s gross cumulative debt has hit $35 trillion — a number so large, the International Monetary Fund warns that it’s putting the entire global economy at risk. But it’s hard to even imagine what the number 35 trillion looks like, much less 91 trillion. So, I decided to employ a time-honored journalistic device: break the number down to make it easier to visualize. So, say you had 35 trillion actual dollar bills, and you put them end to end, starting from Earth. How far up would they reach? Like, maybe, the moon?
As it turns out, the moon is not even close. It only takes about 2.5 billion bills to get to the moon. It’s no wonder the IMF is worried: U.S. debt has boldly gone where no human has gone before. “Yeah, these are big numbers,” said Peter Blair Henry, an economist at Stanford University’s Hoover Institution. To get a sense of just how big they are, Blair Henry agreed to join us as we followed our dollar bill trail out into the solar system. Call it “Debt Trek.” Our $35 trillion debt is so huge, our trail of dollars would breeze past Mars, which is 140 million miles away. Keep in mind, a dollar bill is just over 6 inches long, and 35 trillion of them would almost reach Pluto. I ran the calculations over and over again because, truly, I was stunned, no phasers needed.
Health and Wellness
COVID Safety Measures Amid Summer Spike In Cases
COVID summer surge not slowing down as school year approaches. The latest data from the CDC shows high levels of the virus in wastewater data in almost every state. With more tests coming back positive, it’s important to take necessary measures to protect yourself and others. Current CDC guidelines say you should test for COVID-19 if you develop any symptoms of the virus, or on day-six following exposure to someone who has tested positive. If you require a test, PCR tests are administered by a medical provider in retail pharmacies, urgent care centers, community health centers and primary care offices. Rapid antigen at-home tests can be also purchased at your local pharmacy, retail stores or online.
If you do test positive, the most important thing is to isolate. Staying home helps protect others from getting sick, especially those who are high-risk. The CDC recommends staying home for five days. If you have no symptoms after those five days, you may gradually resume normal activity. You should, however, continue to isolate until you are fever-free for 24-hours without taking any fever reducing medications. To be safe experts also recommend Wearing a mask around others for at least five days.
For a complete list of CDC guidelines and how to protect from COVID-19, click here.
NYS COVID Update
The Governor updated COVID data for the week ending August 9th.
Deaths:
- Weekly: 47
- Total Reported to CDC: 83,746
Hospitalizations:
- Average Daily Patients in Hospital statewide: 1,224
- Patients in ICU Beds: 125
7 Day Average Cases per 100K population
- 9.5 positive cases per 100,00 population, Statewide
- 12.2 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Election 2024
- Here’s What’s In Kamala Harris’s Plan For The Economy – The Hill
- Washington Post Hits Harris Over ‘Populist Gimmicks’ In Economic Proposal – The Hill
- Harris and Chicago’s Mayor Face Migrant Crisis and Potential Protests at DNC - WSJ
- New York Republican’s Ad On Abortion Access Flips The Script On Democrats - Politico
- Vance And Walz Agree To A Vice-Presidential Debate On Oct. 1 Hosted By CBS News - AP
- What AI Is Doing To Campaigns - Politico
- What Do Marijuana, The Death Penalty And Fracking Have In Common? Harris Shifted Positions On Them - AP
- Gov. Kathy Hochul To Speak At Democratic National Convention Tonight – NY State Of Politics
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Latest Polls - FiveThirtyEight
Industry News
Nvidia Vs. The Startups: AI Chip Challengers Chase Efficiency
Asian startups are trying to prove that they can provide better chip solutions -- at least for some applications -- than industry giant Nvidia. While the American company's graphics processing units continue to dominate the AI landscape, startups in the region believe GPUs' high energy consumption and bulky design leave a gap in the market that newcomers can fill. There are two basic categories of AI chips. One is "inference" chips, used to operate existing AI models. The other is "training" chips, high-powered data-processing components used to develop new AI models.
OpenAI, for example, needs tens of thousands of training chips to develop new models of its ChatGPT chatbot. But for ChatGPT to answer a question, it would use an inference chip. "No one has come up with the perfect chip architecture for inference," Toru Nishikawa, CEO of the Japanese AI unicorn Preferred Networks (PFN), told Nikkei Asia. "I think there will be big changes in the architecture in this field ... and whoever supplies a suitable architecture at the lowest price is going to win."
Maersk Agrees To Study Nuclear-Powered Container Shipping
Danish shipping group Maersk has agreed to join a study by maritime services firm Lloyd's Register (LR) and UK-based Core Power, that will assess the potential for nuclear-powered container shipping in Europe, LR said on Thursday. The maritime industry has been exploring whether nuclear fuel can be used to power commercial ships as technological advancements have opened up such options, but industry officials last year said nuclear fuel solutions for ships were at least a decade away. Shipping, which transports around 90% of world trade, accounts for nearly 3% of global carbon dioxide emissions, and the industry is under pressure from investors and environmentalists to find cleaner fuel solutions.
Maersk, LR and Core Power will assess the regulatory feasibility and frameworks that would be needed for a container ship using a fourth-generation nuclear reactor to undertake cargo operations in Europe, LR said in a statement. Small and mass-produced reactors, which are envisaged to be fitted onboard ships, are less powerful and consume less nuclear fuel than traditional nuclear sites.
Finland's Fortum Says New Nuclear Not Feasible At Current Prices
Fortum doesn't believe investing in new nuclear generation capacity is feasible at current low Nordic power prices, its chief executive said on Thursday, after the Finnish utility surprised markets with better than expected second quarter results. Fortum is among companies eyeing possible deals from the Swedish government's goal to build 2,500 MW of new nuclear power by 2035 - the equivalent of two new reactors - and 10 new reactors a decade later to help tackle climate change.
On Monday, a commission appointed by the Swedish government put a price tag of around 400 billion crowns ($38 billion) on the new nuclear plans and proposed a financing and risk sharing model, which would include state loans, a price hedging agreement and a mechanism to share risk and gains. Sweden and Finland are both considering introducing new nuclear power to serve as steady base load for intermittent renewables.
Pension Funds, Creditors Vie Over Proceeds From Yellow Bankruptcy
Collapsed trucker Yellow is facing perhaps its last major reckoning with its long list of creditors, and hundreds of millions of dollars are at stake. A bankruptcy court judge is due to decide in the coming weeks whether the bulk of the failed business’s remaining assets, largely from the proceeds of the sale of properties and equipment, should go to pay off pension plans that claim they collectively are owed billions of dollars.
That could leave hundreds of unsecured creditors, ranging from one of the country’s biggest railroads to a slew of mom-and-pop businesses left in the lurch when Yellow abruptly shut down, getting just pennies on the dollar on their claims. Yellow says in court filings that if the judge rules against the pension funds, it could result in “the truly rare circumstance” of creditors being paid in full. The funds say they are owed hefty compensation because Yellow withdrew early from its obligations. Creditors in bankruptcies often receive just a small fraction of the money they are owed. But Yellow controlled a coveted cross-country network of trucking terminals (including one in Maybrook, Orange County) that has attracted huge interest from other trucking companies, including a swath of sites that were sold late last year under bankruptcy court supervision.
Deere Shrinks Staff to Navigate Farm Economy Downturn
Demand for Deere’s tractors, crop harvesters and other farming equipment has plunged after years of generating record profits from robust sales. As a result, the company has slowed activity at assembly plants, laid off more than 2,000 production workers and trimmed hundreds of salaried employees. The slowdown in production comes amid expectations that falling prices for corn, soybeans and other farm commodities will reduce demand for its equipment. The U.S. government forecasts farm income will decline by about 25% this year from 2023. Higher interest rates are further diminishing farmers’ purchasing power.
Deere has reacted to past downturns by trying to wring revenue out of a softening market with sales incentives or equipment leases. But this time around, the company is aggressively shedding expenses and bracing for a hard landing in a U.S. farm economy. The company has shed about 15% of its hourly workforce since November. Deere’s layoffs of salaried workers are a departure from previous downturns when it had typically relied on voluntary resignations to reduce head count. The company has also said it plans to move production of some models of compact construction machinery from Iowa to Mexico.
Labor Markets – Jobless Claims Cool, Hudson Valley Employment Numbers
Initial jobless claims fell by 7,000 to 227,000 in the week that ended Aug. 10, the Labor Department said Thursday. It is the lowest level since early July. Last week claims fell a revised 16,000 to 234,000, compared with an initial estimate of a fall of 17,000 to 233,000. The four-week moving average of claims fell 4,500 to 236,500. The number of people already collecting jobless benefits in the week that ended Aug. 3 fell by 7,000 to 1.86 million.
Meanwhile the NYS DOL reported that the Hudson Valley's private sector job count grew by 13,200, or 1.6 percent, to 835,900 in the 12 month ending July 2024. Job gains were centered in private education and health services (+11,400), other services (+2,800), leisure and hospitality (+1,200), professional and business services (+700), financial activities (+500) and trade, transportation and utilities (+200). Losses occurred in mining, logging and construction (-3,300) and information (-300). Manufacuturing was unchanged in the 12 months holding at 42,200 people working in the sector.
Clean Fuel Startups Were Supposed to Be the Next Big Thing. Now They Are Collapsing.
Startups promising to power planes, ships and trucks with clean fuel are sputtering before they get off the ground, showing how hard it will be to wean many industries off oil and gas. Many clean-fuel projects have become money pits, in part because of the great amounts of power they need. High interest rates, supply-chain disruptions and expensive power-grid upgrades have driven up electricity prices.
Shares of Plug Power have tumbled more than 90% since the passage of the U.S. climate law two years ago. Shares of biofuels startup Gevo, where Marsh is a board member, are down about 80% in that span. The failures and delays are all but extinguishing the early optimism after the climate law passed. Rising costs have pushed out project timelines and made it more difficult for companies to raise money. The government’s delays in completing tax credits are adding to the challenges. Without clean fuels, emissions at many companies are expected to keep climbing, threatening U.S. and global climate targets. Industries including aviation and shipping are counting on the new fuels because wind and solar power and batteries can’t meet their huge energy needs.
China To Control Exports Of Critical Mineral Antimony From Next Month
China will impose export limits on antimony and related elements in the name of national security, its commerce ministry said on Thursday, Beijing's latest move to restrict shipments of critical minerals in which it is the dominant supplier. China accounted last year for 48% of global mined output of antimony, a strategic metal used in military applications such as ammunition, infrared missiles, nuclear weapons and night vision goggles, as well as in batteries and photovoltaic equipment.
The restrictions are being imposed "in order to safeguard national security and interests, and fulfill international obligations such as non-proliferation", the ministry said in a statement. At a regular weekly briefing on Thursday, the ministry said the curbs were not directed at any specific country or region. The limits, effective from Sept. 15, apply to six kinds of antimony-related products, including antimony ore, antimony metals and antimony oxide, the ministry said in a statement.
BMW Announces Successful Testing Of Humanoid Robots In Manufacturing
BMW Manufacturing and Figure AI have entered into a commercial agreement to evaluate the safe use of humanoid robots in an automotive manufacturing environment. This collaboration has successfully tested the ability of the Figure 2 robot to perform complex tasks that involve dynamic manipulation, intricate grasping and coordinated use of both hands, potentially improving economics and safety for BMW’s teams.
Oliver Bilstein, BMW Manufacturing’s vice president of control and logistics, emphasized the initiative's promising impact on economic efficiency and safety in a statement. The two-week testing period took place in Spartanburg County and yielded positive results. The Figure 2 robots demonstrated advanced capabilities, showcasing their potential contributions to the automotive sector.
Read more - watch at WYFF South Carolina