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Member Briefing December 2, 2024

December 2, 2024

Posted By: Harold King in Daily Briefing,

Top Story

Durable-Goods Orders Barely Budge. No Sign Manufacturing Slump Is Ending.

Orders at U.S. factories posted a tepid increase in October, signaling that an ongoing slump in the industrial side of the economy shows no sign of abating. Durable-goods orders rose 0.2% last month, largely because of new airplane contracts for Boeing Economists polled by the Wall Street Journal had forecast a 0.5% increase. If cars and aircraft are stripped out, new orders minus transportation inched up just 0.1%, the government said. Core orders, viewed by investors as a sign of future business prospects, slipped 0.2% and they aren’t showing signs of recovery.

Orders for commercial planes, an up-and-down category, jumped almost 9% in October. Boeing workers ended a strike in October, but the standoff probably had little effect on bookings. Planes take several years to build after orders are received. Orders for new cars and trucks, meanwhile, fell slightly. The rest of the report was mixed, offering little proof of a manufacturing rebound. The prospect of lower interest rates could boost manufacturing in the next year, but potentially stiff tariffs by the Trump administration could act as another drag if other countries retaliate.

Read More at MarketWatch

PCE – 2.3: October Price Growth Remained Stubborn

Inflation edged higher in October as the Federal Reserve is looking for clues on how much it should lower interest rates, the Commerce Department reported Wednesday. The personal consumption expenditures price index, a broad measure the Fed prefers as its inflation gauge, increased 0.2% on the month and showed a 12-month inflation rate of 2.3%. Both were in line with the Dow Jones consensus forecast, though the annual rate was higher than the 2.1% level in September.

Excluding food and energy, core inflation showed even stronger readings, with the increase at 0.3% on a monthly basis and an annual reading of 2.8%. Both also met expectations. The annual rate was 0.1 percentage point above the prior month. Services prices generated most of the inflation for the month, rising 0.4%, while goods fell 0.1%. Food prices were little changed, while energy was off 0.1%. Housing-related costs have continued to boost the numbers, despite expectations that the pace would cool as rents eased. Housing prices rose 0.4% in October.

Read More at CNBC

Conference Board: Consumer Confidence Hits 16 Month High Post Election

U.S. consumer confidence increased to a 16-month high in November amid optimism over the labor market, expectations for lower inflation and higher stock prices over the next year. Part of the second straight monthly rise in confidence reported by the Conference Board on Tuesday likely reflected the outcome of the Nov. 5 election which returned Donald Trump to the White House and gave his Republican Party control of the U.S. Congress.The Conference Board said its consumer confidence index increased to 111.7 this month, the highest since July 2023, from a revised 109.6 in October. Economists polled by Reuters had forecast the index advancing to 111.3 from the previously reported 108.7.

The rise in confidence was led by consumers under 35 years old. Confidence among consumers in the 35-54 age bracket fell slightly. It rose among all income groups, with the exception of those with annual incomes above $125,000 and consumers making less than $15,000. A record 56.4% of consumers expected stock prices to increase over the next year. Consumers' average inflation expectations over the next 12 months dropped to 4.9%, the lowest since March 2020, from 5.3% in October.

Read more at Reuters

Global Headlines

Middle East

Ukraine

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Policy and Politics

President Biden Pardons Son Hunter After Vowing Not To

President Biden on Sunday pardoned his son Hunter Biden, wiping away his criminal convictions on tax and gun charges despite saying earlier this year he wouldn’t grant such a reprieve. Biden’s pardon came just weeks before his son was set to appear for sentencing hearings in Delaware and California, where he faced the potential of lengthy prison sentences. In a statement, President Biden said it was clear his son had been “treated differently” by the Justice Department.

In Delaware, the younger Biden was found guilty earlier this year on charges he lied about his drug use on a federal form he completed as part of a 2018 gun purchase. Three months later, just as his trial on tax charges was set to begin in Los Angeles, he pleaded guilty to the offenses, in a surprise move that headed off a legal proceeding that was set to feature evidence of the president’s son spending lavishly while failing to pay what he owed to the government.

Watch at The WSJ

California Is ‘Trump-Proofing’ Before Inauguration Day. Will New York Do The Same?

Two days after the November election California Gov. Gavin Newsom issued a proclamation summoning state lawmakers back to Sacramento to boost funding for an anticipated wave of court battles challenging Trump’s expected actions on immigration, the environment and other issues. But in New York, lawmakers aren’t rushing back to Albany before their regular session begins in January. Hochul, a Democrat, has said she’s willing to work with Trump, having already spoken with him by phone and pitching him on things like federal funding for the New York City public transit system.

But she and state Attorney General Letitia James have also said that New York is willing to fight against Trump’s policies should they “harm New Yorkers or roll back their rights,” as Hochul put it the day after the election. They’ve launched a task force that’s expected to recommend actions the state can take to essentially Trump-proof the state as the Republican takes office. The Gothamist takes a look at what New York’s Democrat-dominated state government is — or isn’t — doing ahead of Trump’s second term.

Watch at The Gothamist

Bipartisan Senators Press Leadership For Disaster Aid Vote This Week

A bipartisan group of senators are pushing leadership for swift action on disaster relief as officials warn of dwindling funds. In a letter to leaders on Tuesday, senators from North Carolina, Georgia and Virginia called on both chambers to “bring a robust supplemental appropriations bill to the floor the first week of December.” Republican North Carolina Sens. Ted Budd and Thom Tillis joined Sens. Jon Ossoff (D-Ga.), Raphael Warnock (D-Ga.), Mark Warner (D-Va.), and Tim Kaine (D-Va.) in penning the letter. The senators said their constituents “need immediate help as they work to rebuild their homes and communities.”

“Across the Southeastern United States, Hurricane Helene is estimated to have caused $250 billion in damages, and Hurricane Milton is expected to have caused $50 billion in damages,” the letter stated. Tragically, approximately 261 people lost their lives as a result of both hurricanes. Major urban centers, such as Asheville, North Carolina, only received steady access to potable drinking water on November 18th, and major thoroughfares of commerce like Interstate 40 remain impassible and have sustained significant damage.”

Read more at The Hill

Federal Proposal Would Add Anti-Obesity Drug Coverage

Federal officials want to reverse a longstanding policy and treat obesity itself as a disease that can be treated with medications covered by Medicare prescription drug plans, not just a cosmetic problem. The Centers for Medicare and Medicaid Services last week proposed letting Medicare Part D prescription drug plans cover anti-obesity medications, including both the new GLP-1 agonists and older medications, the same way they would cover medications for any other chronic disease. Today, Medicare drug plans cover anti-obesity medications only when patients need to lose weight to fight diabetes, heart disease or other weight-related conditions.

The proposal "could prompt changes in private health plan coverage outside of Medicare and Medicaid," officials say in the preamble, or official introduction, to the proposed regulations. "This could impact premiums for those plans, including Affordable Care Act marketplace plans, but these impacts are not quantifiable without data on changes for the private health insurance market in response to this proposal. We request comment on the potential impact of our proposal on the private employer insurance market and the ACA marketplace."

Read more at Benefits Pro

Health and Wellness

Long COVID: SARS-CoV-2 Spike Protein Accumulation Linked To Long-Lasting Brain Effects

Researchers from Helmholtz Munich and Ludwig-Maximilians-Universität (LMU) have identified a mechanism that may explain the neurological symptoms of long COVID. The study shows that the SARS-CoV-2 spike protein remains in the brain's protective layers, the meninges, and the skull's bone marrow for up to four years after infection. This persistent presence of the spike protein could trigger chronic inflammation in affected individuals and increase the risk of neurodegenerative diseases. "This may make these tissues especially vulnerable to the long-term accumulation of spike protein," explains Dr. Zhouyi Rong, the study's first author.

The team, led by Prof. Ali Ertürk, Director at the Institute for Intelligent Biotechnologies at Helmholtz Munich, also found that mRNA COVID-19 vaccines significantly reduce the accumulation of the spike protein in the brain. However, the persistence of spike protein after infection in the skull and meninges offers a target for new therapeutic strategies. "Our findings open new possibilities for diagnosing and treating the long-term neurological effects of COVID-19," says Ertürk.

Read more at Medical Express

NYS COVID Update

The Governor updated COVID data for the week ending November 29^th.

Deaths:

Weekly: 17
Total Reported to CDC: 84,500

Hospitalizations:

Average Daily Patients in Hospital statewide: 373
Patients in ICU Beds: 46

7 Day Average Cases per 100K population

2.3 positive cases per 100,00 population, Statewide
3.0 positive cases per 100,00 population, Mid-Hudson

Useful Websites:

Transition 2024

Industry News

Imports Are the Habit U.S. Small Businesses Can’t Quit

Chef’s aprons and biodegradable pillows are just a few of the millions of items that small U.S. businesses still manufacture mostly in China. With existing tariffs adding costs and new levies looming, many owners have been searching for alternatives. The prospect of new tariffs on Mexican imports is making that even more of a challenge. Tormach, a machine-tool maker in Madison, Wis., has been accelerating plans to shift production from China to a factory in Mexico it purchased last year. Then, this week, it learned about President-elect Donald Trump’s plans to impose 25% tariffs on Mexican imports.

Tormach began selling its first Mexican-made milling machines in April, with parts made in Ohio. The products that are made in China use iron casting, a labor-intensive and energy-intensive process. Tormach’s Mexican factory employs mineral casting, a more sophisticated process that pollutes less but is more costly. Making tools in the U.S. isn’t currently an option, Tormach Chief Executive Daniel Rogge said, because of high labor costs and a shortage of skilled workers. “Uncertainty is the real killer,” he said in an interview.

Read more at The WSJ

Stellantis CEO Carlos Tavares Abruptly Quits As US Jeep, Ram Sales Falter

Stellantis Chief Executive Carlos Tavares resigned abruptly on Sunday, two months after a profit warning at the maker of Jeep, Fiat and Peugeot cars that has lost around 40% of its value this year. The company said it would seek to find a replacement CEO in the first half of 2025. Senior Independent Director Henri de Castries said in a statement that different views emerged in recent weeks among major shareholders, the board and Tavares resulting in the CEO's resignation.

Stellantis said in a statement on Sunday that its board, including Chairman John Elkann, accepted the CEO's resignation "with immediate effect" and that a new interim executive committee, chaired by Elkann, would be established. Previously regarded as one of the most respected executives in the auto industry, Tavares' approach came under scrutiny after slumping sales in North American led the automaker in September to issue a profit warning on its 2024 results. That included a forecast for a cash burn of up to 10 billion euros ($10.6 billion), mostly due to slow sales and bloating inventories in its North American market, the group's profit powerhouse.

Read more at Yahoo Finance

Mexico Gets Cold Feet Over New Chinese EV Plant After Trump Win

Chinese electric-vehicle maker BYD is finalizing plans for a factory in Mexico, a push that will test Donald Trump’s trade policies and the Mexican government’s appetite for conflict with the president-elect. BYD officials say the company is aiming to reach a deal with Mexico state officials to break ground on a factory near one of the automotive hubs in central or northern Mexico. Mexico says it isn’t aiming to be a conduit for Chinese-made goods and has made strides in addressing illegal immigration. It needs to persuade the U.S. and Canada of that when talks begin next year on extending the U.S.-Mexico-Canada Agreement on free trade reached during the first Trump administration.

The plans put Mexico in a dilemma, made worse by Trump’s threat Monday to impose a 25% tariff on Mexican goods. The country is already a major car-manufacturing center and generally welcomes foreign investment for the jobs it brings. Mexican officials fear a BYD plant would send the wrong message to Trump and the trade hawks around him by suggesting that Mexico wants to be a backdoor for Chinese companies to sell to Americans. The president-elect is also taking aim at Mexico over immigration and smuggling of fentanyl, the issues he cited in the tariff threat.

Read more at The WSJ

Rivian Lands Conditional $6.6B Loan From Department Of Energy

Rivian Automotive has received a conditional $6.6 billion loan commitment from the Department of Energy, which will aid the company to get its stalled electric vehicle factory project in Georgia back on track, the company announced Monday. The funds, through the DOE’s Advanced Technology Vehicle Manufacturing Loan Program, would help the company resume construction of its $5 billion Georgia EV plant, which was halted in March. The release did not disclose a timeline when the loan would be finalized, though the DOE website notes funding will be available through September 2028. Rivian lost about $4 billion on the 37,396 vehicles it has sold during the first nine months of this year.

Rivian said its plan for the Georgia factory consists of two phases. Phase one of the project is expected to start production in 2028 with annual capacity of 200,000 units, the company said. The company did not disclose when phase two of the project would be completed. Once the factory is finished, its annual production capacity in Georgia will double to 400,000 units, according to the press release. Rivian projects the operation will create 7,500 jobs through 2030.

Read more at Manufacturing Dive

Cool News - Daikin And Copeland Announce US Joint Venture

Two of the HVAC industry’s leading manufacturers, Copeland and Daikin, have announced a joint venture for Copeland to bring Daikin’s inverter swing rotary compressor technology to the US. The joint venture will be established in the United States and will be specific to sales of inverter swing rotary compressors into the US residential market. Copeland will hold a majority share in the new business, which is expected to become operational by the first half of 2025 following receipt of customary regulatory approvals.

Daikin’s inverter swing rotary technology, which was first introduced in the company’s compact AC units in 1997, is said to complement Copeland’s portfolio and delivers substantial benefits including reduced energy usage, cost savings and enhanced reliability. The two companies insist that the collaboration will play a pivotal role in accelerating the shift to heat pumps, meeting both environmental goals and regulatory requirements.

Read more at Cooling Post

US Approves $385 Million Arms Sale To Taiwan

he U.S. State Department has approved the potential sale of spare parts for F-16 jets and radars to Taiwan for an estimated $385 million, the Pentagon said on Friday, a day before Taiwan President Lai Ching-te starts a sensitive Pacific trip. The United States is bound by law to provide Chinese-claimed Taiwan with the means to defend itself despite the lack of formal diplomatic ties between Washington and Taipei, to the constant anger of Beijing.

The State Department also approved the potential sale to Taiwan of improved mobile subscriber equipment and support for an estimated $65 million, the Pentagon said. The principal contractor for the $65 million sale is General Dynamics. Taiwan's defense ministry said it expected the sales to "take effect" within a month and that the equipment will help maintain the F-16 fleet's readiness and "build up a credible defense force". Last month, the United States announced a potential $2 billion arms sale package to Taiwan, including the delivery for the first time to the island of an advanced air defense missile system battle tested in Ukraine.

Read more at Reuters

Mid-Atlantic Manufacturing Activity Flat In November

Fifth District manufacturing activity remained sluggish in November, though more businesses were optimistic that conditions would improve over the next six months, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite manufacturing index remained at -14 in November. Of its three component indexes, shipments decreased from -8 to -12, new orders edged down from -17 to -19, and employment increased from -17 to -10.

The local business conditions index edged down from -13 to -14 in November, while the index for future local business conditions increased from 21 to 31. The future indexes for shipments and new orders also increased further into positive territory, suggesting that many firms expected improvements in the next six months. The average growth rate of prices paid decreased slightly in November, while the average growth rate of prices received increased slightly. Firms expected little change in price growth over the next 12 months

Read more at The Richmond Fed

Lockheed Draws $870M for F-35 Long-Lead Items

The U.S. Dept. of Defense assigned an $869.9-million contract to Lockheed Martin to proceed with procurement of long-lead materials, parts, and components, plus associated support services for Lot 20 of the F-35 Joint Strike Fighter aircraft. The F-35’s Lots 18 and 19 are in production currently in production, though Lockheed and the Pentagon have not yet finalized the production scope in terms of unit numbers and cost. The newly issued contract is due to be completed in 2031, which presumably would coincide with the planned start of production for those aircraft.

The new F-35s will reflect the cost of adopting the Technology Refresh (TR-3) updates, which will improve the jets’ data-processing functions, to accommodate new electronic warfare capabilities. Those updates will include new Pratt & Whitney propulsion technology referred to as the Engine Core Update. The F-35 program budget is also being adjusted to outfit all the current aircraft with the TR-3 and ECU capabilities.

Read more at American Machinist

Volkswagen Workers To Go On Warning Strikes Across Germany

Volkswagen workers will go on warning strikes on Monday at plants across Germany, labour union IG Metall said, marking the first large-scale walkouts at Volkswagen's domestic operations since 2018. The start of the strikes represents a further escalation of a dispute between Europe's top carmaker and its workers over mass layoffs, pay cuts and possible plant closures - drastic measures the company says it cannot rule out in the face of Chinese competition and cooling consumer demand.

"Volkswagen respects the right of employees to take part in a warning strike," a spokesperson said in reply to the union's announcement, adding that the company had taken steps in advance to ensure a basic level of supplies to customers and minimise the impact of the strike. Warning strikes in Germany usually last from a few hours.

Read more at Reuters

Imparting Skills, Building Institutions

Long before the 33,000 members of the International Association of Machinists District 751 in Seattle gained their new contract with Boeing, the IAM had earned their loyalty by establishing a stand-alone, non-profit training organization, to prepare union members to perform their tasks better and to prepare them for greater career potential. It’s called the Machinists Institute, and as senior director of Operations Adam Grim explained, its mission is to expand pathways into good jobs and manage apprenticeship programs for the aerospace sector in Washington, and then expand nationally from there. That objective is taking off.

In addition, the Machinists Institute offers numerous standalone training opportunities covering a wide range of manufacturing skills. Machining is one, of course, but there are also programs for welding and hydraulics training, digital literacy, and customized courses designed to meet an employer’s (or prospective employer’s) specific needs. The Machinists Institute has found an unexpected resource to help them teach these basic skills: a large number of retired manual machinists and industrial craftspeople can step right up to the school’s mills and lathes, turn them on, and start making parts. This gives the Institute a pool of talented, experienced instructors from which to draw — people who understand how to operate these machines and are willing to help train a new generation of machinists

Read more at American Machinist

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