Member Briefing December 16, 2024
The Federal Reserve Is Likely To Cut Interest Rates This Week, What Happens Next Is Anyone’s Guess
The Federal Reserve is expected to lower interest rates by another quarter point at the end of its two-day meeting on Dec. 18. That would mark the third rate cut in a row — altogether shaving a full percentage point off the federal funds rate since September. So far, the central bank has moved slowly as they recalibrate policy after swiftly hiking rates when inflation hit a 40-year high.
“Financial conditions have eased massively. What the Fed runs the risk of here is creating a speculative bubble,” Joseph LaVorgna, chief economist at SMBC Nikko Securities, speaking on CNBC’s “Squawk Box,” said after the report’s release. “There’s no reason to cut rates right now. They should pause.” LaVorgna, who served as a senior economist during Donald Trump’s first presidential term and could serve in the White House again, wasn’t alone in his skepticism about a Fed cut. Appearing along with LaVorgna on CNBC, Jason Furman, himself a former White House economist under Barack Obama, also expressed caution, particularly on inflation. Furman noted that the recent pace of average hourly earnings increases is more consistent with an inflation rate of 3.5%, not the 2% the Fed prefers.
PPI = 3.0%. Wholesale Inflation Jumped More Than Expected
Thursday's report from the Bureau of Labor Statistics showed that its producer price index (PPI) — which tracks the price changes companies see — rose 3% from the year prior, up from the 2.4% in October and above the 2.6% increase economists had projected. This marked the highest year-over-year increase since February 2023. On a monthly basis, prices increased 0.4%, compared to the 0.2% seen in October. Excluding food and energy, "core" prices increased 3.4% year-over-year, above October's 3.1% increase. Economists had expected an increase of 3.2%. Meanwhile, month-over-month core prices increased 0.2%, in line with last month's rise and economist projections.
“PPI isn’t so scary once you get past the headline," Nationwide financial markets economist Oren Klachkin said of this morning’s November Producer Price Index report. "While the underlying data quell fears of a new inflation surge, they don’t suggest a quick fall to 2% either. Producer prices, and the broader inflation complex, are on an extended and bumpy journey to the Fed’s goal.”
Trump Signals Support For US Dockworkers In Stalled Labor Talks
U.S. President-elect Donald Trump on Thursday appeared to back the anti-automation stance of some 45,000 union dockworkers on the U.S. East and Gulf Coasts, whose labor talks are at an impasse over that polarizing issue. The ILA and the United States Maritime Alliance (USMX) employer group are facing a Jan. 15 deadline to finalize talks, which stalled over automation. That cutoff comes just five days before Trump's inauguration. The ILA says automation kills jobs while employers say it is necessary to keep U.S. ports competitive in a rapidly changing global economy.
"The amount of money saved is nowhere near the distress, hurt, and harm it causes for American Workers, in this case, our Longshoremen," Trump said of automation projects in a post on Truth Social. That message followed a meeting with Harold Daggett, who leads the International Longshoremen's Association union that represents the port workers, Trump said. Employers, which include the U.S. operations of Switzerland's Mediterranean Shipping Company, Denmark's Maersk and China's COSCO Shipping have been booking record profits in part due to access to U.S. markets, Trump said on Thursday. "I'd rather these foreign companies spend it on the great men and women on our docks, than machinery, which is expensive, and which will constantly have to be replaced," Trump said.
Global Headlines
Middle East
- Israeli Troops Carry Out Air, Ground Attacks In Gaza - Reuters
- Hamas Yields on Key Israeli Demands, Hostage Deal Hopes Renewed - Yahoo
- U.S. Ally Halts Fight Against Islamic State in Syria as It Battles Rebel Group - WSJ
- Blinken Confirms Direct Contact With Syria’s Rebel Leaders - NBC
- Syrian Prison Chief Arrested in LA for Torture Under Assad Regime - Newsweek
- Israel Shutters Dublin Embassy, Accuses Ireland Of ‘Extreme Anti-Israel Policies’ – France 24
- ‘Executed, Executed, Dead From Sickness’: The Grim Records From Syria’s Notorious Prison - WSJ
- Trump Team Weighs Options, Including Airstrikes, to Stop Iran’s Nuclear Program - 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
- Russia Launches Massive Attack On Ukraine With 93 Missiles, 200 Drones – Newsweek
- Ukrainian Drones Strike Russia As Kyiv Reels From Consecutive Massive Air Attacks - VOA
- Russian Forces Advance Towards Strategic City Of Pokrovsk In Ukraine's East - Reuters
- North Korean Troops Engage Ukrainians in Battle in Russia's Kursk: Reports - Newsweek
- Tracking Putin’s Most Feared Secret Agency—From Inside a Russian Prison and Beyond - WSJ
- Oil Spill Near Black Sea After Two Russian Tankers Seriously Damaged In Storm – France 24
- Moldova Declares Energy Emergency Amid Fears of Russian Gas Cutoff - Newsweek
- Brush With Russia in Baltic Points to New Flashpoint in NATO-Moscow Shadow War - WSJ
- 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
- Cyclone Chido Inflicts 'Catastrophic' Damage On French Island Territory Mayottes – France 24
- S. Korean Opposition Calls For ‘Swift’ Removal Of Impeached Yoon As He Defies Prosecutors’ Summons – Nikkei Asia
- Scholz Sets Germany On Course For An Early Election As He Requests A Confidence Vote This Week - AP
- Cuba Runs Short On Fuel At Pump As Energy Crisis Festers - Reuters
- Niger Defence Ministry Says 39 Killed In 'Horrific' Attacks Near Burkina Faso Border – France 24
- Brazil's Lula Says He's Well After Brain Bleed Surgery - BBC
- China Signals It’s Prepared To Double Down On Support For The Economy As Trump Tariffs Loom - AP
- Scandal-Hit Prince Andrew Back In The UK Headlines Over Alleged Chinese Spy - Reuters
- Bloody Siege Ends Myanmar Army Control Of Western Border - BBC
- New French PM Bayrou Will Meet Far-Right Leader Le Pen On Today – Reuters
Policy and Politics
Economic Impact Of HEAT Act Raises Concerns Among New York Business Leaders
New York business leaders continue to push back against the New York HEAT Act as a week of climate action was underway at the state Capitol last week with advocates urging the passage of the bill this upcoming session. The governor is involved in three-way negotiation over potential chapter amendments to that bill. On Thursday, attention turned to the HEAT Act, as well as another bill requiring state buildings to transition to renewable energy within three years.
Very few people disagree with the idea of lowering emissions, but it’s the potential economic impacts that have many concerned. “I think it’s really important that policymakers keep in mind the unintended consequences of what they’re trying to do,” said Justin Wilcox, executive director of Upstate United. Business leaders in New York, including Upstate United and the Business Council of New York State, have long expressed concern that the HEAT Act's broad strokes will negatively impact New York’s businesses and its ability to attract new ones. Another economic concern with the bill is how it will impact ratepayers. State Senator Tom O’Mara is concerned the limited cap in the bill could leave many New Yorkers exposed to higher costs. “Across the board in our economy, that’s the way it works, There is just no doubt that these costs are going to be passed on to average, everyday middle-class ratepaying New Yorkers.”
Read More at NY State of Politics
Biden Administration Inks Renewed Science Cooperation Deal With China
The United States and China renewed a science cooperation agreement on Friday, the U.S. State Department said, this time with "robust national security guardrails," despite objections from Republicans who argue that the decision should have been left to the incoming Trump administration. For 45 years, the landmark U.S.-China Science and Technology Agreement (STA) has yielded cooperation across a range of scientific fields, creating a framework for agency exchanges and giving the U.S. access to Chinese data useful in areas such as monitoring earthquakes, weather and influenza.
But the deal, renewed about every five years since it was first signed in 1979, lapsed this year amid mounting concerns that China too often failed to uphold intellectual property provisions or reciprocity in data exchanges. Even U.S. analysts who had supported renewing the agreement had said it needed to be fundamentally reworked to safeguard U.S. innovation given that China is now a scientific powerhouse in its own right.
Senate Democrats Livid With Exiting Sinema, Manchin: ‘Pathetic’
Senate Democrats were livid after Sens. Kyrsten Sinema (I-Ariz.) and Joe Manchin (I-W.Va.), two longtime members of their caucus, voted Wednesday to block President Biden’s nominee, Lauren McFerran, to serve another five-year term on the National Labor Relations Board. Senate Democrats blasted their votes to sink Biden’s nominee and hand Republicans a major victory as “pathetic” and “disappointing.”
Some angry Democratic senators went even further by saying they’ll be happy when both Sinema and Manchin are finally out of the Senate next year. Another Democratic senator called the vote “a parting shot” from Sinema and Manchin after four long years of clashing with the Biden administration on everything ranging from prescription drug pricing reforms to tax policy, the federal minimum wage and Senate filibuster reform. Some angry Senate Democrats saw it as a fitting “coda” to the maverick senators’ careers after they thwarted major elements of Biden’s agenda in 2021 and 2022.
Health and Wellness
Lenacapavir Is The 'Breakthrough Of The Year' — And It Could Mean The End Of The HIV Epidemic
2024 has fueled increasing optimism among leading infectious disease experts after the results of two groundbreaking clinical trial results for a drug called lenacapavir showed it to be capable of virtually eliminating new HIV infections through sex. The emerging data surrounding lenacapavir is so astonishing that the drug's development has been heralded as the 2024 Breakthrough of the Year by the journal Science, which described it as representing "a pivotal step toward diminishing HIV/AIDS as a global health crisis."
PURPOSE 2, a study sponsored by Gilead Science, the California-based maker of lenacapavir, found the drug to be 96% effective in preventing HIV infections in the newly released results of a clinical trial of more than 3,200 cisgender men, transgender men, transgender women and gender non-binary individuals who have sex with partners assigned male at birth. The study was conducted across sites in Argentina, Brazil, Mexico, Peru, South Africa, Thailand and the United States. These results followed equally dramatic findings from a previous lenacapavir trial called PURPOSE 1 which involved 5,300 cisgender women in South Africa and Uganda.
NYS COVID Update
The Governor updated COVID data for the week ending December 13th.
Deaths:
- Weekly: 15
- Total Reported to CDC: 84,547
Hospitalizations:
- Average Daily Patients in Hospital statewide: 507
- Patients in ICU Beds: 57
7 Day Average Cases per 100K population
- 3.5 positive cases per 100,00 population, Statewide
- 4.7 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Transition 2024
- FAA Chief Resigns, Opening Another Spot For A Trump Pick - NPR
- Kari Lake to Lead Voice of America - Politico
- Trump Taps Grenell As Envoy, Nunes For Intelligence Board - VOA
- Sanders Says He Hopes To Work With Trump To Raise Minimum Wage – The Hill
- Trump Promises Lower Prices, More Oil For US Economy - VOA
- Gabbard Struggles To Woo Senators Ahead Of Confirmation Fight – The Hill
- Elon Musk Has A Lot Of Room To Slash Government Spending — Former Commerce Secretary Ross Reveals How - Yahoo
- No Labels Looks To The ‘Reset Button’ After Trump’s Victory - Politico
- CEOs Want Trump to Change Course on Tariffs. He Isn’t Budging. - WSJ
- Trump Gets $15m In ABC News Defamation Case - BBC
- Tracking Trump’s Cabinet Picks – Politico
Industry News
Drone Activity Shuts Down Stewart Airport
Drone activity forced runways at New York's Stewart Airfield to shut down Friday night, according to Gov. Kathy Hochul. "Last night (Friday 12/13), the runways at Stewart Airfield were shut down for approximately one hour due to drone activity in the airspace. This has gone too far," Hochul said in a statement released Saturday morning. Hochul's statement echoes a growing frustration among Tri-State Area lawmakers demanding answers from the federal government about the drones' origins amid numerous reports of them flying over New York, New Jersey and Connecticut.
Stewart is a commercial, corporate and general aviation airport, but also home to a major New York Air National Guard base that is shared by the Marine Corps Reserves. The FAA says it is legal to fly a drone during the day or at night as long as the operator is flying below 400 feet and isn't causing a hazard, but restricting airspace is a problem and that is what happened at Stewart Airfield.
Maersk Expects Strong Demand And ‘Another Year Of Disruption’ For Global Trade In 2025
The past year has been a strong one for North American import trade demand, and that should continue for both ocean and air cargo into 2025, according to shipping giant Maersk, but so will supply chain disruptions. After year-on-year growth in North American market imports of roughly 20%-24% across the first three quarters of 2024, Maersk expects the Q4 numbers to also be in double-digit territory, according to Charles van der Steene, president for Maersk North America, who described the full year 2024 as “very strong with resilient demand.”
The disruptions include another potential International Longshoremen’s Association strike at East Coast and Gulf ports across the U.S., and tariff threats made by President-elect Trump ahead of an early Lunar New Year in Asia, when many manufacturing plants in China are idled for a month. These threats have stoked the price of the cargo container as shippers vie for the coveted boxes to ship their imports. Over the last several months, ocean freight spot rates had been on the decline, but on Monday, when ocean carriers released their rates for the Dec. 15- Dec. 31 bookings, logistics managers told CNBC they jumped, a bullish demand indicator.
Amazon Launches Retail Partnership With Hyundai In 48 US Cities
E-commerce giant Amazon has launched its retail partnership with Hyundai Motor Co. in 48 U.S. cities. The deal allows car-shoppers to purchase a new Hyundai vehicle on Amazon and schedule pickup at a local dealer, the retail giant announced Dec. 10. The vehicles are being offered via Amazon’s new online shopping platform “Amazon Autos,” which offers financing, extended warranty plans and trade-in options. The U.S. cities include New York, Boston, Chicago, Los Angeles, Miami, Seattle, San Francisco and other major metropolitan areas.
“We’re partnering with dealers and brands to redesign car shopping—making it more transparent, convenient, and customer-friendly,” Fan Jin, global head of Amazon Autos, said in a statement. Amazon Autos touts the program’s transparent pricing, “eliminating the need for negotiation.” Customers can complete the checkout process entirely online, including selecting trim, color options and scheduling a pickup time at a Hyundai dealer.
GM’s Barra Closes Out 10th Year With Big Challenges Ahead
Mary Barra is closing out her 10th year as CEO of General Motors with several challenges looming: the bumpy transition to EVs; restructuring GM’s China operations; a history of conflict with incoming President Donal Trump; and a change of direction in the company’s autonomous-driving investments. Barra addressed the issues at a meeting with media at a gathering of the Automotive Press Assn. About the reboot of the Trump Admin., Barra acknowledges some friction in Trump’s first term, especially over the closing of GM’s Lordstown, OH, plant, but says she looks forward to meeting with Trump and his policy advisers. "I think we’re very goal-aligned," Barra says. "We want a strong economy. We want a strong manufacturing base in this country. We agree automotive jobs are important. I think there’s a lot that we could work on. But there’s going to be changes.”
Asked how she feels about a competitor, Tesla Motors CEO Elon Musk, having such an influential role in auto industry policy, Barra says: “I can’t really speak to his (Musk’s) intentions, but I do know Elon, and he and I have talked on a number of occasions. If you look at some of the bureaucracy that is hampering many industries and organizations...there is room for streamlining."
Intel Executives Say A Manufacturing Spinoff Is Possible
The two executives leading Intel after the ouster of its chief executive conceded on Thursday that the company may be forced to sell its manufacturing operations if a new chipmaking technology slated for next year does not succeed. Intel both designs and manufactures chips, making it unique in the industry. The company has shed more than $100 billion in value as it struggles to regain its lost lead in manufacturing and missed out on the AI boom dominated by Nvidia.
Michelle Johnston Holthaus and David Zinsner were asked if the company's continued combination of manufacturing and design was tied to the success of a new chipmaking technology called 18A due next year. Intel plans to use that technology to bring manufacturing of a flagship PC chip back in-house after being forced to outsource its biggest product to rival Taiwan Semiconductor Manufacturing. "Pragmatically, do I think it makes sense that they're completely separated and there's no tie?" Holthaus said of the company's product and manufacturing divisions. "I don't think so. But someone will decide that."
Boeing Starting $1B Capacity Expansion
Boeing plans to expand its 787 Dreamliner assembly operations in North Charleston, S.C., and has committed $1 billion for infrastructure upgrades there to support new production targets. It noted that the expansion would result in 500 new jobs over five years. The expansion will be complete in 2027, according to the aircraft builder. Boeing aims to complete 10 new aircraft per month, though it did not indicate when it might reach that goal. Boeing established the South Carolina operation 15 years ago and consolidated the Dreamliner program there in 2022. It has over 7,800 employees at three locations in the state, though only two sites are included in the expansion plans.
The Dreamliner is a long-range aircraft with carrying capacity for 210 to 330 passengers and developed to achieve greater fuel-efficiency for long-range service (7,565 nautical miles / 14,010km.) Boeing claims that the 787 consumes 25% less fuel and creates 25% fewer emissions than the aircraft they replace. Currently, Boeing has a total order backlog of 785 Dreamliners – 34 787-8s, 602 787-9s, and 149 787-10s. For 2024 year-to-date, Boeing has delivered 42 Dreamliners.
Read more at American Machinist
Crystal Ball Preview: Top Cybersecurity Risks In 2025 And Beyond
As we look ahead to 2025, some of the greatest cybersecurity challenges that manufacturing faces include ransomware attacks targeting industrial control systems and nation-state threat actors targeting supply chain vulnerabilities and, consequently, mounting regulatory pressures.
Ransomware attacks are increasingly moving beyond IT networks to target OT environments such as industrial control systems. These attacks can cause operational outages, leading to prolonged downtime and severe financial losses. To prevent such consequences, organizations must expand their view of risk beyond IT networks and into OT environments. Industrial supply chains are highly interconnected since many devices rely on specialized software components. Attackers, particularly nation-state threat actors, are increasingly targeting these relationships to infiltrate OT systems. Organizations must also expand their view of risk to ensure the integrity of all partners within the supply chain.
Amgen To Build $1B North Carolina Pharmaceutical Plant
Amgen is investing $1 billion to build a second drug substance manufacturing facility in Holly Springs, North Carolina, the drugmaker announced Dec. 5. With the new facility, Amgen raises its total planned investment in the city to over $1.5 billion as it aims to increase capacity and meet current and forecasted global demand, according to the Wake County government’s release.
The expansion will create 370 new jobs and contribute to a robust biomanufacturing hub in the state, according to the company press release. Amgen emphasized North Carolina’s biotech ecosystem in Research Triangle Park and skilled workforce as key to its decision. Amgen funds a co-laboratory just 15 miles away at Wake Tech Community College’s Morrisville campus, a space where technologists and industry professionals can collaborate on ideas, new technology and industry trends.
Read more at Manufacturing Dive
Transforming Fusion From A Scientific Curiosity Into A Powerful Clean Energy Source
If you're looking for hard problems, building a nuclear fusion power plant is a pretty good place to start. Fusion — the process that powers the sun — has proven to be a difficult thing to recreate here on Earth despite decades of research. “There’s something very attractive to me about the magnitude of the fusion challenge,” MIT Associate Professor Zachary Hartwig says. “It's probably true of a lot of people at MIT. I’m driven to work on very hard problems. There’s something intrinsically satisfying about that battle. It’s part of the reason I’ve stayed in this field. We have to cross multiple frontiers of physics and engineering if we’re going to get fusion to work.”
Hartwig led a research project at MIT with CFS that further developed the magnet technology and scaled it to create a 20-Tesla superconducting magnet — a suitable size for a nuclear fusion power plant. The magnet and subsequent tests of its performance represented a turning point for the industry. Commonwealth Fusion Systems has since attracted more than $2 billion in investments to build its first reactors, while the fusion industry overall has exceeded $8 billion in private investment. The old joke in fusion is that the technology is always 30 years away. But fewer people are laughing these days.