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Member Briefing August 8, 2024

August 8, 2024

Posted By: Harold King in Daily Briefing,

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Mortgage Applications Reach Highest Volume Since January

Mortgage interest rates dropped last week to the lowest level since May 2023, causing a surge in mortgage demand from both homebuyers and especially current homeowners. Total mortgage application volume rose 6.9% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was at the highest level since January of this year.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) declined to 6.55% from 6.82%, with points falling to 0.58 from 0.62 (including the origination fee) for loans with a 20% down payment. “Mortgage rates decreased across the board last week ... following doveish communication from the Federal Reserve and a weak jobs report, which added to increased concerns of an economy slowing more rapidly than expected,” said Joel Kan, vice president and deputy chief economist at the MBA, in a release. Applications to refinance a home loan, which are most sensitive to weekly rate changes, jumped 16% for the week and were 59% higher than the same week one year ago.

Read more at CNBC

China’s Exports Miss Expectations In July, While Imports Pick Up With Growth Of 7.2%

China’s imports grew faster-than-expected in July, while export growth came in below forecasts, according to customs data released Wednesday. Exports in U.S. dollar terms rose by 7% in July from a year ago, missing expectations for a 9.7% increase, according to a Reuters poll. The July figure was also slower than 8.6% growth in June. U.S. dollar-denominated imports rose in July by 7.2%, far more than the forecast of 3.5%, according to the poll.

China’s imports from the U.S. surged by 24% year-on-year in July, according to CNBC calculations of official data. China’s imports from the Association of Southeast Asian Nations rose by 11%, while those from the European Union climbed by 7%. On a year-to-date basis, China’s imports from the U.S. remained down, with a drop of 1.4%, while exports were up by 2.4%. China’s U.S. dollar exports to the U.S. and European Union each grew by about 8% year-on-year in July, while those to the Association of Southeast Asian Nations surged by 12%, making the region China’s largest trading partner by far.

Read more at CNBC

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Policy and Politics

Copyright Office Calls for Law on AI-generated Digital Replicas

The U.S. Copyright Office is tackling the issue of digital replicas — videos, pictures or audio recordings digitally created or manipulated to falsely depict an individual – and is calling on Congress to pass a federal law protecting victims from the knowing distribution of such replicas. Due to the sophistication of artificial intelligence, digital replicas have become a pressing copyright issue, including AI-generated musical performances, robocall impressions of political candidates and deep fakes in pornographic pictures and videos. While many target entertainers and politicians, average U.S. citizens are increasingly victimized.

The Copyright Office released the first part of a series of releases from its report on artificial intelligence and copyright. Shira Perlmutter, register of Copyrights and director of the U.S. Copyright Office, said the report makes clear there are gaps in existing legal protections. Existing federal laws, such as the Copyright Act, the Federal Trade Commission Act and the Lanham Act, do not prohibit many of the uses of unauthorized digital replicas. Additionally, current state laws addressing the right of privacy and right of publicity are often too narrow because they only cover famous people, soldiers and the deceased.

Read more at Harris Beach

DOE Awards More Funds to Strengthen Grid

The Department of Energy on Tuesday awarded $2.2 billion to eight electric transmission and microgrid projects across 18 states, aiming to move more electricity and strengthen the grid against extreme weather. The money, made available through the 2021 Bipartisan Infrastructure Law, is the second round of funding in the department’s Grid Resilience program. In combination with the $3.5 billion given last October to 58 grid-fortifying projects across 44 states, the grants will add 50,000 megawatts of capacity and 1,000 miles of transmission lines across the country.

Although DOE has helped push long-stalled wires projects to completion, and the Federal Energy Regulatory Commission has approved new rules to open grid development bottlenecks, the pace of big wires projects has slowed dramatically. In 2016, a total of 1,048 miles of new high-voltage lines were built in the U.S. In 2023, that number dropped to 55.5. The NAM has long advocated for permitting reform and continues to be a vocal proponent. “The U.S. electrical grid needs strengthening to ensure affordable, reliable and plentiful energy,” said NAM Director of Energy and Resources Policy Michael Davin. “But the project slowdown in recent years points to an even bigger problem: regulatory bottlenecks keeping projects from getting online and fortifying the grid. We need sensible, workable permitting reform.”

Read more at E&E News

NTSB To Scrutinize FAA Oversight Of Boeing

The National Transportation Safety Board (NTSB) on Wednesday plans to review oversight of Boeing (BA.N), opens new tab after a 737 MAX 9 mid-air emergency in January raised serious safety questions. The board is holding the second day of an investigative hearing into the door panel blowout in the new Alaska Airlines (ALK.N), opens new tab jet after the first day focused on Boeing actions before the incident.

NTSB Chair Jennifer Homendy said the board wants to know why the Federal Aviation Administration (FAA) did not take action earlier. FAA Administrator Mike Whitaker said in June the agency was "too hands off" in Boeing oversight. The FAA's approach before the mid-air accident was "too focused on paperwork audits and not focused enough on inspections," Whitaker added. The FAA said Tuesday that "this is not business as usual for Boeing and we will continue to hold them accountable. The company must fix its systemic safety and quality-control issues."

Read more at Reuters

Health and Wellness

Researchers Cast Doubt Over Benefits Of New Alzheimer’s Therapies

Scientists from Cambridge University have cast doubt on the efficacy and long-term benefits of two new drugs for Alzheimer’s disease, highlighting "concerning" side effects, small proven benefits and challenges in their administration. Lecanemab and donanemab, are the most recent medicines to enter the market to treat Alzheimer's, a disease which is more prevalent in older people. The researchers question whether these drugs have any great impact. "Based on current evidence, it is far from clear whether [these types of therapies] can ever significantly reduce population-level dementia morbidity at scale," they write.

Late-stage trials of the two drugs showed that they slowed the progression of Alzheimer’s disease. For donanemab, developed by Eli Lilly, participants in a Phase 3 trial who received the drug showed a 22 percent to 29 percent slowing in cognitive decline after 76 weeks, compared to those who received a placebo. For lecanemab, developed by Japan’s Eisai and U.S. biotech Biogen, those who received the drug declined 1.21 points on an 18-point cognition scale, while those who received the placebo declined 1.66 points, the companies the companies reported.

Read more at Politico

Election 2024

Industry News

Meet The American Olympians With Corporate Jobs

While big-name stars like Simone Biles, LeBron James and Katie Ledecky are professional athletes, dedicating all of their time to training, playing and raking in sponsorship money, not all Olympians are swimming in cash. Disc thrower Veronica Fraley received financial support from rapper Flavor Flav and Reddit co-founder (and Serena Williams’ husband) Alexis Ohanian after speaking about how she would not be able to pay her rent, despite representing the U.S. at the Olympics.

Some athletes are juggling professional athletics with corporate jobs. Take Nic Fink, who won three medals during this year’s swimming events and works as a project manager at an Atlanta-based engineering firm. Then there’s former venture capitalist-turned-cyclist Katie Faulkner who won gold in Sunday’s women’s road race. And then there are those who will be looking for jobs after taking their medals home. Rugby player and bronze medalist Naya Tapper said she was open to opportunities and looking to “exchange LinkedIns” during a Team USA press event. Good news for gold medal winners, though: The United States pays a $37,500 bonus to athletes who bring home the gold.

Read more at Forbes

RTX Gets $478M NATO Contract To Replenish Germany’s Patriot Missiles Sent To Ukraine

RTX’s Raytheon has received a $478 million contract from NATO to replenish the Patriot GEM-T missiles Germany has sent to war-torn Ukraine, the company announced Tuesday. Awarding the contract was the NATO Support and Procurement Agency, which supports a partnership between Ukraine, Denmark, the Netherlands, Norway and Germany — countries who have agreed to finance the procurement of GEM-T missiles to replenish those sent to Ukraine in support of its defense against Russia.

There are currently eight European countries that purchase the Patriot air and missile defense systems. That customer list grows to 19 countries worldwide. Earlier this month, Raytheon won the company’s second contract this year, worth $1.2 billion, to provide major Patriot air and missile defense components to Germany as the country sends additional Patriot systems to Ukraine. Raytheon previously inked a Patriot systems contract with Germany in March for the same amount. The company is expected to deliver four complete Patriot fire units under the previous contract and four fire units under the new deal.

Read more at Defense News

Honda Q1 Profit Jumps 23%, Helped By Hybrid Vehicle Sales

Japan's Honda Motor (7267.T), opens new tab reported a 23% increase in first-quarter profit on Wednesday as the automaker benefited from a weaker yen, higher pricing and growing hybrid vehicle sales in the U.S. and its home market. Japan's second-biggest carmaker said quarterly operating profit totaled 484.7 billion yen ($3.3 billion) in the April-June period, compared with an average estimate of 472.4 billion yen in a poll of seven analysts by LSEG.

The company maintained its full-year operating profit forecast of 1.42 trillion yen, while slashing its sales outlook for China by 21% to 840,000 vehicles for that period. Honda said last week its global vehicle sales grew 2% to 1.9 million over the first six months of the year, largely due to a 9% rise in sales in the U.S., its top market. In contrast, it faced heavy headwinds in China where it saw sales slump 23% to 416,000 vehicles. Honda is seeking to catch up with faster-moving global rivals in the shift to battery-powered electric vehicles, for which it is looking to profit from cooperation with rival Japanese automaker Nissan Motor

Read more at Reuters

Carlos Ghosn: Honda Plans 'Disguised Takeover' of Nissan and Mitsubishi

One of the most controversial executives in the car industry is not afraid to call things as he sees them. After saying Nissan is "boring, mediocre" and in a "bad position" while describing the Renault-Nissan alliance as "small and fragile," the 70-year-old fugitive now has something to say about the newly formed Honda-Nissan-Mitsubishi partnership. Regarding the newly formed Honda-Nissan-Mitsubishi alliance announced on August 1, details remain murky. However, Honda and Nissan have separately inked a deal to work on batteries, electric motors, and on software-defined vehicles (SDVs). Additionally, Nissan and Honda will complement each other's lineups with combustion cars and fully electric models. Nissan continues to hold a 34 percent stake in Mitsubishi.

In a new interview with Automotive News, Ghosn said Honda is plotting a "disguised takeover" of Nissan and Mitsubishi. He believes that Honda is by far the biggest of the three Japanese automakers, so it puts the company in the "driver's seat" to take control. Complete details about the new agreement haven't been fleshed out, but the former man in charge of Nissan argues that Honda will call the shots.

Read more at Motor1

Boeing and NASA Tussle Over Plan to Bring Starliner Astronauts Home

The astronauts who flew to orbit on Boeing’s Starliner spacecraft are waiting for NASA and the company to determine whether it will get them home. Boeing has vouched for the craft. Not everyone at NASA is convinced, according to people close to the discussions, and the agency is working on backup plans that depend on SpaceX. Barry Wilmore and Sunita Williams have been aboard the International Space Station since June 6, when they became the first astronauts to fly in Boeing’s Starliner vehicle. The temporary failure of several thrusters and discovery of helium leaks in the ship’s propulsion system turned the planned weeklong visit to the ISS into an extended stay.

Tensions between Boeing and some NASA leaders surfaced last week, when officials couldn’t agree on using Starliner to take Wilmore and Williams back, and a detailed review of Starliner’s readiness for the flight back was postponed, according to people familiar with the situation. NASA has been buying time as it deals with internal dissent over whether Starliner should return the two astronauts. The agency on Tuesday pushed back a planned SpaceX launch of a new ISS astronaut crew, delaying it from mid-August to Sept. 24, allowing more time to finalize return plans for Wilmore and Williams.

Read more at The WSJ

How Do Big Swings In The Stock Market Affect Consumer Behavior?

How do big dips in the market affect consumer psychology and behavior? To get a sense of how people are feeling about the economy, look at how often they’re Googling “recession.” That’s one of Justin Wolfers’ favorite gauges, anyway. He’s a professor of economics and public policy at the University of Michigan. “It used to be that that would only spike during really bad times, like really deep recessions,” Wolfers said.

Syon Bhanot, an economics professor at Swarthmore College, said humans tend to feel losses more acutely than gains. “So if the stock market goes down by 2% in a day, that’s much more likely to trigger an emotional reaction than the stock market going up by 2% in a day,” said Bhanot. Even if the drop is short-lived. “So imagine you go to a casino, you win $1 million with your first hand, you lose $1 million with your second hand. Do you feel the same as when you walked in? I suspect you won’t,” said Bhanot. He said people react similarly to swings in the stock market, and that can affect how we behave. “Perception is everything in the economy,” Bhanot added.

Read More at Marketplace

German Industry Remains Fragile Despite Fastest Uptick This Year

Germany’s industrial sector picked up pace in June, with the country’s automotive industry in particular helping output, although questions remain as to whether this represents a sustained recovery for the sector. Industrial output rose 1.4% on month in June, on a seasonally and calendar-adjusted basis, its fastest rate in 2024, but only partially offsetting the 3.1% decline in May, German statistics agency Destatis said Wednesday.

While production increased at the beginning of 2024, it has since turned around, contributing to Europe’s largest economy contracting 0.1% in the three months from April to June. Over the second quarter, which offers a less-volatile look at trends in the sector than a month-on-month comparison, production was 1.3% lower than the first three months of the year, Destatis said. Surveys of manufacturing businesses in Germany also show worsening sentiment in recent months, including a falling barometer for the chemical sector this week, and insolvencies in the country are rising.

Read more at The WSJ

Elon Musk’s Plan for Monster Rocket Rattles Florida’s Space Coast

Florida’s Space Coast, as this stretch of palm trees, subdivisions and rocket pads is called, has never seen anything quite as otherworldly as Elon Musk. Musk’s space company wants to launch Starship, the Earth’s largest and most powerful rocket, dozens of times annually from the Cape in the years ahead. The rocket from SpaceX towers nearly 400 feet at liftoff—more than the Statue of Liberty—and is at the center of NASA’s plan to return to the moon and Musk’s ambition to colonize Mars.

Much has changed here since astronauts celebrated successful launches with a parade, and it’s far from clear how Musk’s galactic plans will mesh with modern-day Florida. Gone are the days when the region was relatively empty, a quality that made it well-suited for rockets. Several important businesses now jostle for territory, including the $6.7 billion cruise industry featuring massive oceangoing vessels launched by the likes of Disney and Carnival from Port Canaveral. The population of Brevard County, meanwhile, has swelled to over 600,000 from 22,000 in 1950. Among concerns raised during a public comment period: the deafening rocket noise and vibration from the monster ship, which will have as many as 35 thruster engines that will throw off as much as 23 million pounds of force at takeoff. That’s roughly equal to the thrust of 160 Boeing 787 planes taking off simultaneously from exactly the same location.

Read more at The WSJ

Billionaire Phillip “Terry” Ragon Believes A HIV Breakthrough Is Just Around The Corner. Makes $400 Million Donation

A cure for HIV has remained elusive, but billionaire Phillip “Terry” Ragon believes a breakthrough is just around the corner. Ragon and his wife Susan established the Ragon Institute with a $400 million donation for research, and he refers to their efforts as a “Manhattan Project on HIV.” Still, governments, nonprofits and companies have poured billions into HIV vaccine development over the last two decades, and none have made it past Phase 3 clinical trials. Part of the problem, Ragon says, is that the government funders are too focused on a win. “You would expect most experiments to fail,” he says, as his efforts are focused on funding riskier, earlier-stage research.

Ragon remains optimistic about the possibility of an HIV cure in his lifetime in part because he has taken a similarly methodical and long-term approach to building his software business. He draws inspiration from the philosopher Thomas Kuhn, who famously argued that science progresses through long periods of slow evolution punctuated by radical revolutions, which Kuhn called paradigm shifts. “Every once in a while,” Ragon says, “there’s something that just turns the world upside down.”

Read more at Forbes

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