Member Briefing August 22, 2024
Top Story
Fed Minutes Point To ‘Likely’ Rate Cut Coming In September
Federal Reserve officials at their July meeting moved closer to a long-awaited interest rate reduction, stopping short while indicating that a September cut had grown increasingly probable, minutes released Wednesday showed. “The vast majority” of participants at the July 30-31 meeting “observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting,” the summary said.
While all voters on the rate-setting Federal Open Market Committee voted to hold benchmark rates steady, there was an inclination among an unspecified number of officials to start easing at the July meeting rather than waiting until September. The document stated that “several [meeting participants] observed that the recent progress on inflation and increases in the unemployment rate had provided a plausible case for reducing the target range 25 basis points at this meeting or that they could have supported such a decision.”
U.S. Added 818,000 Fewer Jobs Than Previously Thought From March 2023 To March 2024, Government Says
Prior data far overestimated the recent labor market recovery, the government said Wednesday, a potentially worrisome sign as slowing job growth shakes confidence in the economy, though some experts suggest the downward revisions aren’t as bad as they may seem on the surface. The U.S. added 818,000 fewer jobs than previously estimated from March 2023 to March 2024, according to the Bureau of Labor Statistics, which released the data about 30 minutes after the scheduled 10 a.m. EDT release.
That brings the total employment growth (not including farm jobs) for the 12-month period from 2.9 million to about 2.1 million, knocking average monthly growth during that period from about 242,000 to about 174,000. The update came as part of the regularly scheduled first benchmark revision to the government’s monthly nonfarm payrolls data, the most widely cited measure of the overall U.S. employment picture. The massive revisions were due to the government’s recalibration to more precise quarterly unemployment claim data as opposed to the monthly surveys of employers which are used for initial monthly estimates.
Equipment Finance Market Confidence Reaches Highest Level Since Early 2022
Newly released survey results show improved confidence in the equipment finance sector. The August 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) reached 58.4, the highest level since February 2022, the Equipment Leasing & Finance Foundation reported Wednesday. The index shows an increase from the July figure of 50.7. According to the August survey results, 37.5% of respondents believe business conditions will improve over the next four months, a dramatic increase from just 3.9% last month. During the same time period, 45.8% of the executives expect conditions to remain the same. 91.7% of the survey respondents rate the current U.S. economy as “fair,” and the remaining 8.3% evaluate it as “poor.” None of the executives rate the economy as “excellent.”
“Interest rates are expected to decrease shortly. Historically when this happens businesses tend to increase their capex spending. I believe there is pent-up demand in several sectors that are waiting for this interest rate reduction to happen. Interest rates typically impact transactional business and equipment finance is one of those industries,” says survey respondent Donna Yanuzzi, EVP of 1st Equipment Finance Inc.
Global Headlines
Middle East
- Israel And Hamas: The Latest News – The Guardian
- Gaza Cease-Fire Talks Put Iran Attack on Hold - WSJ
- Israel Is Winning But Lasting Victory Against Hamas Will Require Installing New Leadership in Gaza – Foreign Affairs
- Israel and Hezbollah Exchange Strikes Amid Fears of Escalation - NYT
- US Criticises Israeli PM's 'Maximalist' Ceasefire Stance - BBC
- US Officials Say Gaza Deal On Edge Of Collapse - Politico
- Blinken Wraps Up Mideast Trip With Gaza Deal Still Elusive - Reuters
- Iran Probe Finds Raisi Helicopter Crash Caused By Weather – Barron’s
- Police Arrested More Than 70 People Near The Israeli Consulate In Chicago On Tuesday - Politico
- 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
- Moscow Comes Under Most Massive Drone Attack This Year - Newsweek
- The Mysterious Middlemen Helping Russia’s War Machine – The Economist
- How a General’s Blunder Left Russia’s Border Vulnerable - WSJ
- India's Modi To 'Share Perspectives' On Ending Ukraine War During Kyiv Trip - Reuters
- Russian 'Logistics General' Dies in Front of Family - Newsweek
- Russian Forces Claim Another Town Captured In East Ukraine - BBC
- Ukraine Pushes For Long-Range Strikes As Troops Advance In Russia – The Hill
- 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
- Dozens Forced To Quit Venezuela's PDVSA Over Political Views, Workers Say - Reuters
- Bangladesh’s Protesters Take Power and Find Governing Isn’t Easy - WSJ
- UK Announces New Measures To Crack Down On Migrant Crossings From France – France 24
- U.S. Democrats' Foreign Policy Platform Pivots Back To Europe – Nikkei Asia
- White House Downplays Chinese Concerns Over Possible US Nuclear Strategy Change - VOA
- Von Der Leyen’s New Commission: The Names We Know So Far - Politico
- Groups Say They’re Shut Out Of Global Treaty Talks On Plastics Pollution In Bangkok - AP
- France’s Summer Break Is Ending – And The Bitter Fight To Form A Government Is Back – France 24
- Argentina To Join US Minerals Partnership To Diversify Supply Chains Away From China - SCMP
Policy and Politics
Biden Approved Secret Nuclear Strategy Refocusing on Chinese Threat
President Joe Biden approved in March a highly classified nuclear strategic plan for the United States that, for the first time, reorients America’s deterrent strategy to focus on China’s rapid expansion in its nuclear arsenal. The shift comes as the Pentagon believes China’s stockpiles will rival the size and diversity of the United States’ and Russia’s over the next decade. The new strategy emphasizes “the need to deter Russia, the PRC and North Korea simultaneously.” In the past, the likelihood that American adversaries could coordinate nuclear threats to outmaneuver the American nuclear arsenal seemed remote. But the emerging partnership between Russia and China, and the conventional arms North Korea and Iran are providing to Russia for the war in Ukraine, has fundamentally changed Washington’s thinking.
The White House never announced that Biden had approved the revised strategy, called the “Nuclear Employment Guidance,” which also seeks, for the first time, to prepare the United States for possible coordinated nuclear challenges from China, Russia and North Korea. The document, updated every four years or so, is so highly classified that there are no electronic copies, only a small number of hard copies distributed to a select few national security officials and Pentagon commanders.
Read More at the Seattle Times
New York Court Of Appeals Rules State Law Allowing Early Voting By Mail Is Constitutional
New York’s highest court affirmed that state lawmakers had the proper authority when they expanded who was eligible to vote by mail last year. The Court of Appeals ruled 6-1 to uphold a state Supreme Court judge’s decision that a law created in 2023 that allows any registered voter to request an early mail ballot is constitutional. The law was challenged by U.S. Rep. Rep. Elise Stefanik and backed by the state Republican Party.
Plaintiffs argued over if the meaning of the words "at an election" mean voters are legally required to vote at a polling place. They also discussed the intent versus functionality of a 1966 amendment which eliminated language that more plainly defined that requirement. The court did grapple with the history of the constitutional provision's interpretation. It acknowledged as recently as 2021, the Legislature appeared to believe it needed a constitutional amendment to enact no-excuse absentee voting. The general public voted down that amendment by referendum.
Read more at New York State of Politics
Boom or Misallocation of Capital? IRA Fuels $133B Clean Manufacturing Investment.
The Inflation Reduction Act has sparked a manufacturing boom across the U.S., mobilizing tens of billions of dollars of investment, particularly in rural communities in need of economic development. The future of those investments could hinge on the outcome of the U.S. presidential election. The prospect of a Republican victory has shaken the confidence of some investors who worry the IRA could be weakened or in a worst-case scenario repealed.
Companies have announced $133 billion of investments in clean energy technology and electric vehicle manufacturing since President Joe Biden signed the IRA into law in August 2022, according to data from the Massachusetts Institute of Technology and the Rhodium Group. “It is having a transformative effect within the manufacturing sector,” said Trevor Houser, a partner with the Rhodium Group. “The amount of new manufacturing activity that we’re seeing right now is unprecedented in recent history, and is in large part due to new clean energy manufacturing facilities.” Former President Donald Trump has threatened to dismantle the law “Upon taking office, I will impose an immediate moratorium on all new spending grants and giveaways under the Joe Biden mammoth socialist bills like the so-called Inflation Reduction Act,” Trump told supporters at a May.
Health and Wellness
Why The Latest Mpox Outbreak Is Raising Alarm Among Health Experts
An escalating mpox outbreak is causing alarm among some health experts, who warn that the latest strain of the virus could be more fast-spreading and deadly than an early 2022 outbreak. The World Health Organization last week declared mpox a global public health emergency following the spread of an outbreak in the Democratic Republic of Congo (DRC) to neighboring countries. Since the new outbreak, cases have been identified in countries where mpox is not endemic, such as Sweden, Pakistan and Thailand — although its unclear which strain has been unidentified in some of these nations.
health experts have warned of the “many unknowns” surrounding the latest outbreak — and in particular a new subvariant — which could make it harder to contain. “Clade 1b has recently emerged and there are many unknowns that need to be addressed,” said Trudie Lang, professor of global health research and director of The Global Health Network at the University of Oxford. “There is emerging evidence of differences in transmission and symptoms; such as more commonly passed person to person and from mothers to their babies in pregnancy,” she said.
Election 2024
- Election Betting Markets Swing Towards Trump As RFK Jr. Mulls Dropping Out - Forbes
- Tim Walz And Bill Clinton Headline The Democrats’ Third Day - AP
- US Polling 'Nostradamus' Says RFK Jr. Dropping Out Will Help Harris - Newsweek
- How Pro-Palestinian Influencers Are Using Social Media to Push Harris on Israel - WSJ
- Three Things The Democrats Don’t Want To Talk About At DNC - BBC
- Walz’s Uber-Liberal Record as Governor Opens Line of Attack for GOP - WSJ
- Tim Walz-JD Vance Polls: Walz More Popular Than Vance In Early Surveys - Forbes
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Latest Polls - FiveThirtyEight
Industry News
Boeing Halts Testing of New 777X Widebody Jet
Boeing has put a halt to the certification tests underway for the 777X aircraft, and confirmed a report that inspectors have found cracks on a “thrust link” in place between the engines and wings to balance loads for the aircraft. Two thrust links are installed between the wing and each of the aircraft’s two engines. According to Boeing, the problem was discovered following a test flight from Hawaii to Boeing’s complex in Everett, Wash., though reportedly the same issue has been identified on two comparable aircraft following test flights.
The 777X test flights using four completed jets are underway in the expectation that the new aircraft will be launched next year and ready for service in 2026, an introduction date that has already been postponed several times. The Boeing 777X is a twin-engine, widebody aircraft that updates the current 777 series to offer greater flight range and higher seating capacity, with a wider span for its composite wing structures and folding wing tips to ensure the jets can service current airport facilities. Boeing has promoted the 777X as “the world’s largest and most efficient twin-engine jet”. Boeing has landed more than 500 firm orders for the 777X, which will be offered in two variants, as well as over 100 options for further deliveries.
Read more at American Machinist
Ford Pulls Back Further From EVs With $1.9 Billion SUV Pivot
Ford Motor is delaying production of a new plant in Tennessee to produce a next-generation all-electric pickup truck and canceling plans for a three-row electric SUV, the company said Wednesday. Instead, Ford said it will prioritize the development of hybrid models, as well as electric commercial vehicles such as a new electric commercial van in 2026, followed by two pickup trucks in 2027.
The pickups are expected to be a full-size truck, which will be produced at the Tennessee plant that’s currently under construction in 2027, and a new midsize pickup. Ford said it will incur a special non-cash charge of about $400 million for the write-down of certain product-specific manufacturing assets, including the cancellation of the three-row SUV. Vehicle production at the new plant in Tennessee was initially expected to begin next year. The company said it still expects to begin battery cell production at the site in 2025.
Target Pulls Out of a Sales Rut. Macy’s Doesn’t.
Target lowered prices and snapped a streak of sales declines while Macy’s reported another quarter of shrinking sales, signs that U.S. shoppers are spending—albeit selectively. Target’s price decreases helped drive more visits to its stores and the company raised its profit goals for the year. Macy’s, which has been closing department stores, lowered its sales goals slightly for the year. “I think we see an incredibly resilient consumer in the face of high inflation and some of the other challenges they have been facing to manage their household budget,” Target Chief Executive Brian Cornell said on a call with reporters. Shoppers remain focused on value, he said.
Shoppers spent more on nonfood items, including apparel, a sign that Target’s effort to lower prices and offer a steady flow of new items in those categories is paying off, said executives. The company also had the benefit of comparing its most recent quarter to the same period last year, when comparable sales fell 5.4%, the company’s largest quarterly decline in 15 years. Macy’s, citing a “challenging consumer environment,” said its sales fell 3.8% in the quarter that ended Aug. 3, compared with the same period last year.
TJX Companies Raises Full-Year Guidance, Posts 5.6% Sales Gain For The Most Recent Quarter
TJX Companies raised its full-year guidance on Wednesday after posting another quarter of strong sales, but its outlook still fell just short of Wall Street’s expectations. The discounter behind Marshalls, HomeGoods and TJ Maxx is now expecting full-year earnings to be between $4.09 and $4.13, compared with estimates of $4.14, according to LSEG. For the current quarter, TJX is expecting earnings per share to be between $1.06 and $1.08, compared with estimates of $1.10. The retailer has been taking market share from competitors like Target and Macy’s and has become a haven for price-sensitive consumers who may be watching their dollars but still want to spring for new clothes.
During the quarter, consolidated comparable store sales increased by 4% and were “entirely driven by an increase in customer transactions,” indicating more shoppers are coming to its stores, TJX said. That jump is ahead of the 2.8% uptick that analysts had expected, according to StreetAccount. The growth was primarily driven by TJX’s Marmaxx division in the U.S., which includes TJ Maxx, Marshalls and Sierra stores.
Why Anti-DEI Lawsuits Are Piling Up This Year
Corporate DEI programs are under fire a year after the U.S. Supreme Court overturned affirmative action. While that ruling didn’t extend to the public sector, it has still spurred some employers to consider dismantling their programs or reassess their initiatives. A key concern is the new legal risks they face, which include anti-DEI lawsuits targeting diversity training, diversity targets and workplace discrimination. More than a third of business executives said their organizations are facing uncertainty regarding how to move forward with their DEI programming in a legally compliant way, according to a report out earlier this year from legal firm Littler. And one in three executives said their organizations do not have clear plans and goals in place relating to DEI, that survey found.
So far this year, at least 37 federal lawsuits targeting DEI programming have been filed, according to a tracker compiled by the NYU School of Law’s Meltzer Center. Last year 40 were filed. In 2022, 15 were filed, and in 2021, 11 were filed. Some of these cases are being called reverse discrimination lawsuits, where typically white men sue over claims hiring decisions were made based on protected characteristics like race, age and gender and ultimately did not favor them. Other types of lawsuits are targeting diversity training. In Arsenault vs. HP, the plaintiff, a white man, alleges he was subject to a “shaming session” after expressing his negative opinions on his employer’s DEI training which led to retaliation and his firing. That case is ongoing.
US Workers Down On Compensation And Work Prospects, New York Fed Says
In its Survey of Consumer Expectations Labor Market Survey for July, the regional Fed bank said that as of last month, "satisfaction with wage compensation as well as with non-wage benefits and promotion opportunities at respondents' current jobs all deteriorated." As of July, 56.7% of respondents said they were satisfied with their pay compared to 59.9% who held the similar view in July 2023. Benefits satisfaction dropped to 56.3% from 64.9% over the same time period, while satisfaction over future career path improvement ebbed to 44.2% of those polled, from 53.5% in July 2023.
The survey noted that the declines in satisfaction were concentrated among women, those without college degrees and those who earned under $60,000 per year. The report also weighed in on the state of workers' so-called reservation wage, which is what prospective new hires say they would need to consider taking a job. That wage has been increasing by leaps and bounds in recent years, amid tight labor markets and high levels of inflation. The reservation wage was $81,147 in July, down slightly from the record prior quarter reading of $81,822 but up considerably from the $78,645 reported in July 2023. In contrast to what workers say they need to take a job, expected salary offers for a new job fell to $65,272 in July from $67,416 a year ago.
GM To Power 3 Assembly Plants With Renewable Energy
GM will fuel three of its assembly plants with renewable energy after signing a 15-year agreement with NorthStar Clean Energy. The renewable energy purchase agreement with NorthStar is GM’s largest power purchase deal. It is also a significant step towards the company’s goal to be carbon neutral by 2040. Writing on LinkedIn, GM’s CSO Kristen Siemen said: “Collaborating with NorthStar Clean Energy aligns perfectly with our vision of a zero-emissions future.
NorthStar’s Newport Solar project in Newport, Arkansas, will support the electricity needs of GM’s Lansing Delta Township Assembly, Lansing Grand River Assembly in Michigan and the Wentzville Assembly site in Missouri by adding renewable energy directly to the grid GM sources from. With the new purchase agreement in place, GM said that it has sourcing agreements from 17 renewable energy plants across 11 states, making the company the automotive industry’s largest buyer of renewable power by capacity.
Read more at Sustainability Magazine
A Natural-Gas Glut Is Forcing Drillers to Dial Back—Again
A glut of natural gas is depressing prices and prompting fresh cutbacks in America’s drilling fields, despite one of the hottest summers on record. Big producers such as EQT and Coterra Energy are choking back output, waiting to connect new wells to pipelines and delaying drilling projects. They aim to buoy prices that have rarely been lower during the heat of the summer, when air conditioning creates a lot of power demand. Benchmark natural-gas futures ended Tuesday at $2.198 per million British thermal units, down 14% from a year ago and 30% less than the recent peak in mid-June.
U.S. gas output hit a daily record of 105 billion cubic feet in December, according to S&P Global Commodity Insights. An unusually warm winter left a lot of gas unburned during heating season. By spring, the market was swamped and prices tumbled. A round of production curtailments lifted prices but they were driven back down by resurgent output. The volume of natural gas in domestic storage facilities is 13% higher than the five-year average for this time of year despite record demand this summer from utilities, according to the Energy Information Administration.
World's Oldest Person, A Spanish Woman Born In California, Dies 'Happy' At 117
Maria Branyas, the world’s oldest person, died in a Spanish nursing home at 117 years old, according to her X account and a spokesperson at the home. “Maria Branyas has left us. She has gone the way she wanted: in her sleep, at peace, and without pain,” her family wrote in a post on her account on X. She was born in 1907 in San Francisco, California but moved to Catalonia in 1915. She married a Catalan doctor named Joan Moret, with whom she had three children. Her husband passed away in 1976 at the age of 86, according to Guinness.
Branyas, who had lived through the 1918-1920 Spanish flu pandemic, gained fame in Spain in May 2020 after she became the oldest person to successfully recover from COVID-19 at the time. In a recent interview she recounted memories of the Spanish Civil War and said she vividly remembered the D-Day landings. Catalonia's regional president, Salvador Illa, re-shared the X post and expressed his condolences, adding in part, "We lose an endearing woman, who has taught us the value of life and the wisdom of the years."