Member Briefing August 29, 2024
Nvidia Posts Strong Quarter, Offers Bullish Outlook
Nvidia NVDA -2.10%decrease; red down pointing triangle delivered strong quarterly revenue growth and a robust financial outlook, indicating persistent momentum in the nearly two-year-old AI boom despite concerns that investment has surged ahead too quickly. The AI chip giant on Wednesday said sales in the three months through July more than doubled from a year earlier to $30 billion, and it projected around $32.5 billion for its current quarter. Nvidia’s profit also more than doubled to $16.6 billion. All those figures topped Wall Street forecasts in a FactSet survey.
Reflecting challenges from the increased complexity of its newest products, the company said gross profit margins in the quarter narrowed from the period that ended in April. Chief Financial Officer Colette Kress pinned the blame partly on production issues with its next-generation Blackwell chips that required a design tweak. However, Nvidia said production of the chips is still set to ramp up in the fiscal fourth quarter that ends in January, which it expects to add several billion dollars of revenue for the period.
Resilient Economy 'Feels Very Untrue' to Many Americans
Maddy, of Grand Rapids, said declaring the U.S. economy as "very strong"—like International Monetary Fund Managing Director Kristalina Georgieva did in late June—feels out of touch to many Americans, citing prohibitive food costs, rising real estate taxes and escalating energy bills. Maddy said she felt disregarded by Biden's mid-August proclamation, characterizing his perspective from the White House as incomplete—despite positive economic indicators like deescalating inflation and fewer jobless claims than expected. Optimism is abounding for others, however, as the annual inflation rate dipped in July to 2.9 percent—the lowest level since March 2021—combined with encouraging jobless claims for two consecutive weeks.
Promising economic indicators won't instantly reverse the lingering impact of hard times for millions of families, workplace culture expert Jessica Kriegel said. "Perception and reality are sometimes aligned and sometimes not," Kriegel told Newsweek. "The macro data does not represent the lived experiences of Americans on a day-to-day basis."
Labor Day Gas Prices Could Be Lowest In Years—And May Keep Dropping This Fall
Travelers hitting the road over Labor Day weekend are in for lower gas prices than last year—and potentially the lowest prices since 2021—as the cost of gas continues to drop as it typically does at the end of summer. GasBuddy’s annual Labor Day travel forecast predicts the average price of gas will fall to $3.27 by Monday, which would be the lowest Labor Day price since three years ago, when gas was an average of $3.16 per gallon. If Monday’s price per gallon is $3.27, it would be a 50 cent-per gallon decrease from last year’s $3.77 per-gallon price.
The dropping prices are at least in part due to lower demand, according to GasBuddy, and AAA’s Andrew Gross said last week “the clouds of war overseas are less dark at the moment and the Atlantic is quiet now too, which is taking pressure off of oil prices,” referring to a relative lull in hurricane activity recently. Heading into the holiday weekend, prices are highest in Hawaii ($4.66), California ($4.61), Washington ($4.18) and Nevada ($3.97), according to AAA, and prices are lowest in Oklahoma ($2.89), Mississippi ($2.89), Texas ($2.95) and Tennessee ($2.96).
Global Headlines
Middle East
- Israel And Hamas: The Latest News – The Guardian
- Israel Launches Large-Scale Raids Targeting Militants in West Bank - WSJ
- How US Surged Forces to Middle East To Keep Iran at Bay - Newsweek
- Israeli Minister Calls For Gaza-Like Action In West Bank As IDF Conducts Major Raid - Forbes
- Fate Of Gaza Ceasefire Deal In Hamas Leader's Hands, US Intel Official Says - Reuters
- Risk Of ‘Extremely Serious’ Oil Spill Grows In Red Sea Following Houthis Attack – The Hill
- Festival Spot Where Hamas Killed 364 People Becomes Pilgrimage Site - VOA
- 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
- Zelensky to Deliver Victory Plan to Biden, Harris, Trump - Newsweek
- Russia Dismisses Zelensky’s ‘Plan’ To End The War – France 24
- Russia Reports Fire At Rostov Fuel Depot After Ukrainian Drone Attack - VOA
- Ukraine Says Fear Of Escalation Among Allies Is Major Problem - Reuters
- Israel's New Ambassador Issues Stark Warning To UN Over Hezbollah, Iran Inaction - Fox
- US Maintains Stance on Strikes Inside Russia Despite Ukrainian Pleas - 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
- World Food Program Launches Probe Into Its Sudan Operations As Famine Spreads - Reuters
- If A China And America War Went Nuclear, Who Would Win? – The Economist
- Thailand's 'Land Bridge' Ambitions Face Fresh Roadblocks – Nikkei Asia
- Poland Needs F-35s Before Dispatching Mig-29s To Ukraine, Says Minister - Politico
- What To Know About Pavel Durov: Arrested Telegram CEO In The Middle Of Growing Tensions Between Russia And France - Forbes
- A Time Bomb Is Threatening Economies Across Asia - WSJ
- Computer Malfunction At Dutch Defense Ministry Shuts Down Services Nationwide - Politico
- Typhoon Shanshan Prompts Japan to Issue Evacuation, Emergency Warnings
- Border Controls Are 'Last Resort,' Brussels Says After Solingen Attack Inflames Migration Debate - Euronews
- Chinese, US Officials Discuss New Round Of Talks Between Biden And Xi - Reuters
Policy and Politics
Proof-Of-Citizenship Voting Bill Push Could Threaten Government Shutdown
A conservative-backed push for stricter proof-of-citizenship requirements for voting could complicate efforts to avert a government shutdown next month. Lawmakers on both sides of the aisle have acknowledged a stopgap of some kind, also known as a continuing resolution (CR), will be necessary to keep the government funded past Sept. 30. But calls are growing among House conservatives to use that must-pass measure to force consideration of a partisan bill aimed at barring noncitizens from voting — laying the groundwork for a clash with the Democratic-led Senate, which would likely reject such a package.
Advocates of pushing the SAVE Act say the legislation would ensure that only citizens can vote in federal elections, partly by making it mandatory for states to obtain proof of citizenship to register voters and also requiring states to purge noncitizens from voter rolls. However, most Democrats have pushed back strongly against the measure. The Biden administration vowed to veto it when the House considered it last month, noting it is already a crime for noncitizens to vote in federal elections.
‘Freelance Isn’t Free’ Law Takes Effect
On Nov. 22, 2023, Gov. Kathy Hochul signed into law the “Freelance Isn’t Free Act” (the Act or FIFA), which was amended on March 1, 2024. The Act is codified in Article 44-A of the New York General Business Law. Article 44-A of the General Business Law creates several protections for freelance workers retained as independent contractors. The Act is intended to ensure that freelance workers receive timely compensation for all services performed. The law goes into effect on Aug. 28, 2024
The Act imposes several requirements for hiring parties engaging freelance workers. As discussed in greater detail below, the main requirements pertain to written contracts, timely payment and anti-retaliation. The Act also creates an administrative complaint procedure for freelance workers whose rights have been violated as well as a private right of action. Among the requirements are: Written contracts, timely payments, prohibition of discrimination and retaliation, and avenues of redress.
Read more at Bond Schoeneck & King
IRS Signs Off On Employer's Matching Contribution Allocation Proposal, Outside The 401(K) Plan
An Internal Revenue Service official has blessed an arrangement that will let workers allocate their employer's annual retirement plan matching contribution to any one of four different accounts. The workers will be able to send some or all of the employer's contribution to a 401(k) account, a health savings account, an educational assistance program account or a retiree health reimbursement arrangement, according to a new IRS private letter ruling signed by Denise Trujillo, the Health & Welfare branch chief at the IRS Office of Associate Chief Counsel.
The heart of Trujillo's letter is a passage concerning the tax treatment of matching contribution value sent outside the 401(k) plan. "The proposed amendments do not permit employees to elect between having the employer contribution paid in cash (or some other taxable benefit) or contributing it to a plan deferring the receipt of compensation," Trujillo writes. Because the employees cannot convert the matching contributions into cash, the arrangement would not cause the 401(k) plan to "offer an additional cash or deferred arrangement," Trujillo says. The IRS uses the private letter rulings to give taxpayers informal guidance about how it interprets the tax rules. Other employers cannot rely on the interpretation given in a letter provided for one particular taxpayer, but employers and their tax advisors can use private letter rulings to get a good sense of how the IRS sees an issue.
Health and Wellness
What to Know About the Updated 2024-2025 COVID Vaccines
As a summer marked by yet another COVID-19 surge draws to a close, newly updated COVID vaccines are becoming available for the fall and winter months, a time of year when respiratory illnesses can overwhelm hospitals. The new shots target a SARS-CoV-2 strain called KP.2, and they are expected to provide protection against severe illness, hospitalization, and death related to COVID. The shots aren’t meant to prevent every SARS-CoV-2 infection; rather, the aim is to protect against severe illness, hospitalization, and death. They also restore and enhance protection from previous shots, which has declined over time.
The Centers for Disease Control and Prevention (CDC) recommends that everyone ages 6 months and older get one of the updated vaccines. Pfizer’s and Moderna’s updated mRNA vaccines are fully approved for everyone ages 12 and older, and each has a Food and Drug Administration (FDA) emergency use authorization (EUA) for infants and children ages 6 months through 11 years.
Election 2024
- Trump Says He’ll Debate Harris After Suggesting He Might Back Out - Forbes
- Lawsuits Fly Over Election Rules and Who Gets to Vote - WSJ
- NY -18: Democrats Target Latino Voters In Hudson Valley Swing District – City & State
- Texas Removes 1 Million People From Voter Rolls – The Hill
- Former RFK Jr. Running Mate: Democrats Have ‘Lost Their Soul’ – The Hill
- Big Pharma: Trump Vs. Harris Is A Showdown Between Two Industry Foes – Benefits Pro
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Latest Polls - FiveThirtyEight
Industry News
German Economy Shrank by 0.1% in Q2, Statistics Office Confirms
The German economy shrank by 0.1% in the second quarter of 2024 compared with the previous three-month period, the statistics office reported on Tuesday, confirming preliminary data. "After the slight increase in the previous quarter, the German economy cooled down again in spring," statistics office president Ruth Brand said in a statement. In the first quarter of 2024, German gross domestic product rose by 0.2% quarter on quarter. Compared to a year earlier, the German economy showed no growth, having last recorded year-on-year expansion in the first quarter of 2023.
The economic decline was largely driven by a reduction in household consumption and investment. Household final consumption expenditure fell by 0.2%, reversing the gains seen earlier in the year. On the other hand, government final consumption rose by 1.0% from the previous quarter. Foreign trade, typically a strong point for the German economy, also failed to provide any positive momentum. Exports of goods and services declined by 0.2% compared to the first quarter of 2024, reflecting weaker global demand and supply chain disruptions.
US Clean Energy Jobs Growth Rate Double That Of Overall Jobs, DOE Report Says
Jobs in the U.S. clean energy industry in 2023 grew at more than double the rate of the country's overall jobs, and unionization in clean energy surpassed for the first time the rate in the wider energy industry, the Energy Department said on Wednesday. Employment in clean energy businesses - including wind, solar, nuclear and battery storage — rose by 142,000 jobs, or 4.2% last year, up from a rise of 3.9% in 2022, the U.S. Energy and Employment Report said. The rate was above the overall U.S. job growth rate of 2% in 2023.
- Unionization rates in clean energy hit 12.4%, more than the 11% in the overall energy business, it said. That was driven by growth in construction and utility industries and after legislation passed in 2022 including the bipartisan CHIPS Act and Inflation Reduction Act, the department said.
- Employment in the utility scale and rooftop solar industries grew 5.3% adding more than 18,000 jobs, it said.
- The solar installation industry in California, the country's most populous state, says it has lost more than 17,000 jobs due to high interest rates and the state's lowering of net meter rates that allow customers to be credited for excess power their rooftop panels generate.
- New jobs in fossil fuels were mixed. The natural gas workforce grew by more than 77,000 or 13.3%, while jobs in petroleum fell more than 44,000 or 6%. Coal jobs fell nearly 8,500 or 5.3% as power generation continued to switch from coal to gas, wind and solar.
Two More Chinese Airlines To Start Flying China-Made COMAC C919 Jet
Air China and China Southern Airlines will become the second and third Chinese carriers to fly China's homegrown COMAC C919 passenger jet after receiving their first planes on Wednesday, state-run Chinese Central TV (CCTV) said. The two state-owned carriers received the C919 at Chinese planemaker COMAC's Pudong base in Shanghai, according to CCTV. The C919 delivered to Air China has 158 seats, with eight business class and 150 economy class.
Air China and China Southern are expected to receive another two C919 jets each this year, according to domestic media outlet Yicai. COMAC is trying to break into a passenger jet market dominated by Western manufacturers Airbus and Boeing that has been hit by aircraft shortages and a Boeing safety crisis. The C919 entered domestic service in May last year with China Eastern (600115.SS), opens new tab, which flies seven of the jets domestically. A forecast from aviation consultancy Cirium in May sees just under 1,700 C919 deliveries by 2042, giving the C919 around a 25% market share compared to Boeing's 30% and Airbus's 45%. The first C919 delivery to a private airline is expected by year-end.
At Least 17 Dead And 40 Injured In Explosion At Indian Pharmaceutical Plant
An explosion at Escientia Advanced Sciences in Andhra Pradesh, India, has led to the death of at least 17 people. According to Sreenivas Janyala for The Indian Express, seven people where working on the first floor of the facility when the explosion occurred, killing them instantly. The other workers, who were on the floor below, were killed when the walls collapsed on them. The deceased workers include an associate director, a general manager, an assistant manager, senior executives, trainee engineers, biologists, equipment operators, a painter, and a member of the housekeeping staff.
The explosion occurred “due to the heavy solvent vapor cloud at the power panel area in the ground floor.” Srinivasa Rao Korada, CFO of the Escientia Group, told Reuters that workers were attempting to plug the chemical leak when the explosion occurred. "Workers had noticed that leak, they were attending to it, and had almost plugged the leak when this happened," he said.
401(k) Millionaires Reaches Record High: Fidelity
A record number of 401(k) accounts contained $1 million or more during the second quarter of 2024, according to an analysis from Fidelity Investments. There were about 497,000 so-called 401(k) “millionaires” last quarter, a 2.5 percent increase from 485,000 during the first quarter, according to Fidelity’s analysis of 24 million 401(k) accounts across 26,000 employer-sponsored plans.
The number of individual retirement account (IRA) participants carrying balances of $1 million or more also hit a record high last quarter, jumping 6 percent from the first quarter to nearly 399,000. The average retirement account balance grew for the third consecutive quarter, with the average 401(k) and IRA balance up 1 percent to $127,100 and $129,200 respectively. The average 401(k) account balance is up 13 percent from a year ago, and the average IRA account balance is up 14 percent.
Delaware Supreme Court Agrees Appeal Over Zantac Cancer Case Claim
Pharmaceutical giant GlaxoSmithKline (GSK) and rival drug manufacturers, including Sanofi, Pfizer and Boehringer Ingelheim, have won the right to an appeal hearing by the Delaware Supreme Court, regarding the now-discontinued antacid Zantac amid claims that an ingredient in it may cause cancer. There are now more than 70,000 lawsuits regarding the drug. The appeal is against a lower court judge's earlier agreement to allow the plaintiffs to offer expert testimony on the alleged cancer link. The drug makers argued the testimony was not supported by sound scientific methods.
The main concerns revolve around ranitidine, Zantac's active ingredient, which is believed to potentially degrade into N-nitrosodimethylamine (NDMA), a possible carcinogen, if the drug is stored at higher temperatures or left on shelves for a long time. However, GSK has consistently denied these claims, saying that the expert testimony on which these concerns were based was not reliable.
Taking a Page From Amazon, Walmart to Offer Logistics Outside Its Own Marketplace Sales
Walmart is taking its competition with Amazon deeper into the warehouse. The retailer next month is opening its logistics and fulfillment services to third-party sellers who are looking to fill orders from platforms outside the retailer’s own marketplace. The service is part of a broader logistics portfolio that Walmart is taking to outside sellers, including a plan to handle imports on behalf of merchants from ports of origin in Asia to Walmart’s U.S. distribution centers. The company will also offer sellers access to trucking delivery at discounted rates.
For Walmart, the services mark a step toward building a third-party logistics operation effectively mirroring the Fulfillment by Amazon business that has become a big revenue stream at the e-commerce giant. Like Amazon, Walmart is trying to leverage a big investment in logistics infrastructure by pushing third-party sales that piggyback on the warehousing and distribution network that the retailer uses for its own business. It’s the latest sign of how the tools that underpin e-commerce are triggering broad changes in the retail logistics market
UAlbany Launches New Programs in Semiconductor Engineering
he University at Albany’s College of Nanotechnology, Science, and Engineering has launched three new graduate certificate programs in semiconductor engineering. The programs are designed to meet the demand for a skilled workforce in the U.S. and global semiconductor industry, a market that is expected to reach $1 trillion annually by the end of the decade. A recent analysis by McKinsey & Co. forecast as many as 10,000 new semiconductor-related jobs in New York alone as the Capital Region makes its case as a leading contender to be part of the National Semiconductor Technology Center, a major R&D effort funded by the CHIPS Act.
The programs, housed within UAlbany’s Department of Nanoscale Science and Engineering, include graduate certificates in Semiconductor Manufacturing, Semiconductor Patterning and Processing and Semiconductor Metrology. They are now active and recruiting students for the fall 2024 semester. The launch of the programs follows several important strategic investments in UAlbany’s burgeoning College of Nanotechnology, Science, and Engineering, as well as other significant investments across New York State.
The U.S. Corn Crop Is Great. Farmers’ Finances, Not So Much.
The U.S. farm belt is headed for a bumper crop. Few farmers are celebrating, though. Grain prices, under pressure since the Covid commodity boom crested, have fallen further in 2024. Rainfall has been ample across farm country for the first time in years, staving off the drought that has plagued the central U.S. and putting Midwestern corn and soybean harvests on track to set records.
That is intensifying what was already shaping up as a dismal year financially on the farm. Budgets drawn up in the spring are no longer viable. Persistently high costs for farm essentials such as seeds and fertilizer are gobbling up revenue. It is a return to leaner prepandemic times for many farmers. Prices for corn and soybeans were rangebound in the second half of the 2010s, weighing on farm returns. The record-high prices in 2021 and 2022 gave farmers a boost, but momentum has once again turned against them.