Member Briefing December 3, 2024
U.S. ISM Manufacturing PMI Improves To 48.4 In November Vs. 47.5 Expected
The business activity in the US manufacturing sector continued to contract, albeit at a softer pace in November, with the ISM Manufacturing PMI rising to 48.4 from 46.5 in October. This reading came in better than the market expectation of 47.5. Of the five sub-components that feed into the headline, only new orders was in expansion territory in November coming in at 50.4. While this is only just above 50, it marks a jump of a little more than three points from the prior month. An improved outlook for bookings follows last week's durable goods report which showed orders for non-defense capital goods, ex-aircraft, a proxy for future capex spending, fell 0.2% in October. The Employment Index of the PMI survey edged higher to 48.1 from 44.4 in the same period
Whether this move in November is a reflection of stocking up in worried anticipation of tariffs or just an organic demand-driven increase remains to be seen. Note that inventories shot up 5.5 points, the largest monthly gain in today's report, though the 48.1 reading is not yet indicative of a broadly based stockpiling effort.
U.S. Construction Spending Climbs More Than Expected In October
The Commerce Department said construction spending climbed by 0.4 percent to an annual rate of $2.174 trillion in October after inching up by 0.1 percent to a rate of $2.165 trillion in September. Economists had expected construction spending to rise by 0.2 percent. The bigger than expected increase by total construction spending came as spending on private construction grew by 0.7 percent to an annual rate of $1.676 trillion.
Spending on residential construction jumped by 1.5 percent to a rate of $934.0 billion, more than offsetting a 0.3 percent dip in spending on non-residential construction to a rate of $742.3 billion. Public construction fell by 0.5 percent to an annual rate of $497.6 billion amid decreases in spending on both educational and highway construction. Over the past year, construction spending was up 7.2%. Spending is not adjusted for inflation.
Data Keep Markets in Suspense About Fed Cuts
Last week’s major economic updates offered new details but no consequential surprises, leaving big questions hanging over the economy’s trajectory heading into the final month of the year. The Fed’s preferred 12-month measure of core inflation stuck stubbornly at 2.8% in its October reading, marking six months of no further progress back toward the central bank’s 2% target. The Commerce Department’s updated estimate of third-quarter GDP confirmed a 2.8% annualized growth rate. November’s jobs report is due Friday.
Expectations of easing inflation pressures and of a continually cooling labor market have suggested to some economists the economy is still slackening. The minutes of the Fed’s November meeting, released Wednesday, showed that, while the central bank’s voters are open minded about the pace of rate cuts, they still believed their stance was exerting a drag on the economy last month, with more reductions ahead before monetary policy comes into balance. Meanwhile, wide-open questions about the incoming Trump administration’s early priorities threaten to overtake the Fed’s rate-cut path as the prime source of policy uncertainty heading into next year.
Global Headlines
Middle East
- Israel Says Israeli American Soldier Thought To Have Been Taken Hostage Is Now Presumed Dead - AP
- Iran Ramps Up Nuclear Program, Close to Weapons-Grade: UN - Newsweek
- Israel-Hezbollah Ceasefire Largely Holding, But Some Fighting Continues - VOA
- Airstrikes Pound Rebel-Held Aleppo, a Strategic Prize in Syrian Civil War - WSJ
- Iraqi Militias Enter Syria To Reinforce Government Forces, Military Sources Say - Reuters
- UN Suspends Aid Deliveries Through Main Gaza Crossing - BBC
- She Fled Israeli Bombing Four Times. It Still Found Her - BBC
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Zelensky Suggests War Could End If Unoccupied Ukraine Comes Under Nato – BBC
- Ukraine War Map Looks 'Grim' for Zelensky as Russian Offensive Accelerates - Newsweek
- Russia’s Plunging Currency Spells Trouble For Its War Effort – The Economist
- Desertion Threatens To Starve Ukraine’s Forces At A Crucial Time In Its War With Russia - AP
- Ukraine Sees Use Of Uncrewed Ground Vehicles, AI-Targeting Drones Surging Next Year - Reuters
- Germany’s Scholz Announces Arms Worth €650M For Kyiv During Surprise Visit - Politico
- 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
- French Government Faces Collapse In No-Confidence Vote – Politico
- Le Pen Says Her Party Will Vote To Oust Barnier In No-Confidence Motion - Reuters
- Ireland’s Election Delivers Pro-Business Continuity Despite Voter Discontent - CNBC
- Russia and China Issue Update After Nuclear Bomber Patrol Near US Allies - Newsweek
- China Tensions Prompt U.S. Navy Race to Reload Missiles at Sea - WSJ
- Georgia's PM hits back as protests and resignations intensify - BBC
- Largest Climate Case In History Opens At ICJ - Reuters
- Norway Hits Pause On Controversial Deep-Sea Mining Plan - CNBC
- Romania’s Pro-EU Parties Hold Off Far Right In Parliamentary Vote - Politico
- Chad Orders French Troops' Departure, Triggers Fresh Anti-French Military Sentiment - VOA
- Start Of Biden's Visit To Angola Overshadowed By Son's Pardon - Reuters
- Vietnam High-Speed Rail Map Shows Proposed North-South Route – Newsweek
Policy and Politics
We Haven’t Seen A Pardon As Sweeping As Hunter Biden’s In Generations
President Joe Biden’s grant of clemency on Sunday night — an extraordinary political act with extraordinary legal breadth — insulates his son from ever facing federal charges over any crimes he possibly could have committed over the past decade. Experts on pardons said they could think of only one other person who has received a presidential pardon so sweeping in generations: Nixon, who was given a blanket pardon by Gerald Ford in 1974.
Donald Trump and his allies have long fixated on the president’s son, and Trump has repeatedly pledged to use his second term to investigate and prosecute members of the Biden family. So rather than merely pardoning his son for the gun crimes for which he was convicted and the tax crimes for which he pleaded guilty, the president’s pardon covers all “offenses against the United States which he has committed or may have committed or taken part in” from Jan. 1, 2014, through Dec. 1, 2024. That language mirrors the language in Ford’s pardon of Nixon, which did not merely cover the Watergate scandal but extended to “all offenses against the United States” that Nixon “has committed or may have committed” between Jan. 20, 1969, and Aug. 9, 1974 — the exact span of Nixon’s presidency.
Will Court Uphold TikTok Ban? What To Know As Ruling Expected This Week
The U.S. Court of Appeals for the D.C. Circuit is now deliberating on TikTok’s lawsuit against the federal government, which seeks to strike down the law forcing TikTok to divest from Chinese parent company ByteDance or else be banned from U.S. app stores. The Justice Department has maintained that banning TikTok is necessary due to ByteDance’s Chinese ownership, claiming that keeping access to the app “creates a national-security threat of immense depth and scale,” though the specific evidence for why it poses a threat is all redacted in court filings.
TikTok argues the ban infringes on the company’s First Amendment rights, and the case has been combined with a separate lawsuit brought by TikTok creators. The company argues the law’s requirement that it divest from ByteDance is “not possible technologically, commercially, or legally,” particularly within the “arbitrary” timeline, and TikTok alleged that if it did divest, the company would be “reduced to a shell of its former self.” Both sides have asked the court to rule by Friday so there will be time to pursue any next steps or appeals before the ban is slated to take effect on January 19.
U.S. Tightens Curbs on China’s Access to AI Memory, Chip Tools
The United States on Monday launched its third crackdown in three years on China’s semiconductor industry, curbing exports to 140 companies, including chip equipment maker Naura Technology Group, among other moves. The effort to hobble Beijing’s chipmaking ambitions also hits Chinese chip toolmakers Piotech, ACM Research and SiCarrier Technology with new export restrictions as part of the package, which also takes aim at shipments of advanced memory chips and more chipmaking tools to China. The move is one of the Biden administration’s last large-scale efforts to stymie China’s ability to access and produce chips that can help advance artificial intelligence for military applications, or otherwise threaten U.S. national security.
It comes just weeks before the swearing-in of President-elect Donald Trump, who is expected to retain many of Biden’s tough-on-China measures. The package includes curbs on China-bound shipments of high-bandwidth memory chips, critical for high-end applications like AI training; new curbs on 24 additional chipmaking tools and three software tools; and new export curbs on chipmaking equipment made in countries such as Singapore and Malaysia.
Health and Wellness
An Anti-Inflammatory Diet Can Boost Your Health. What To Eat And What To Avoid
Science shows that fried, fatty, sugary, ultra-processed foods increase inflammation in the body. Inflammation is our immune system’s response to stimulus, such as an injury or infection. In small doses, it’s actually good for you—it increases blood flow and sends the right immune system cells to the affected area, kicking your body’s defenses into action. But low-grade inflammation that continues over time—like the kind caused by constant stress—not only raises your risk for chronic disease, it also creates more psychological distress.
Simply cutting inflammatory foods from your diet will boost your energy, mood, and sleep, but Naidoo says consistent anti-inflammatory eating will change the makeup of your digestive system in about a month. “A lot of us walk around with inflammation in the gut that’s related to the food we eat, and healing of the gut takes about 28 days,” she says. As a rule, your goal should be fewer processed foods and more whole foods. A shift in this direction will have lasting benefits, not just for your physical health but your mental health too.
Transition 2024
- Trump Labor Pick Surprises Unions, Rattles Business – The Hill
- Here Are The Times That Biden, The White House Said They Wouldn’t Pardon Hunter – The Hill
- Trump Teases Jan. 6 Rioter Pardons After Biden Pardons His Son - Forbes
- How RFK Jr. Transformed From Green Hero to Vaccine Skeptic - WSJ
- Will An Upstate New Yorker’s Pro-Trump Sign Pave The Road To Congress? - Politico
- Schumer Urges Thune To Preserve Senate’s ‘Advice And Consent’ Role On Trump Nominees – The Hill
- Big Pharma Pushes Trump Team To Ease Medicare Drug Price Negotiation Rules - Reuters
- Who Is Massad Boulos? Trump's New Arab and Middle Eastern Senior Adviser - Newsweek
- Why Are Politicians Called Lame Ducks? - VOA
- Tracking Trump’s Cabinet Picks – Politico
Industry News
China Bans Exports Of Gallium, Germanium, Antimony To US
China will ban exports to the U.S. of items related to gallium, germanium, antimony and superhard materials that have potential military applications, its commerce ministry said on Tuesday, a day after Washington's latest crackdown on China's chip sector. Beijing's directive on so-called dual-use items, which cites safeguarding national security and interests and takes immediate effect, also requires stricter review of end-usage for graphite items shipped to the United States.
The curbs strengthen enforcement of existing limits on exports of the critical minerals that Beijing began rolling out last year but apply only to the U.S. in the latest escalation of trade tensions between the world's two largest economies ahead of President-elect Donald Trump taking office. However, there have been no Chinese shipments of wrought and unwrought germanium or gallium to the U.S. this year through October, even though it was the fourth and fifth-largest market for the minerals, respectively, a year earlier, Chinese customs data show. Gallium and germanium are used in semiconductors, while germanium is also used in infrared technology, fibre optic cables and solar cells.
UN Talks on Plastics Fall Short, End With No Global Treaty to Control Waste
Despite calls by nearly 100 countries to limit harmful plastic products and chemicals, United Nations negotiations on plastic waste ended Sunday in Busan, South Korea, without consensus on a global treaty. UN officials said they will convene another round of talks in 2025 in an attempt to salvage efforts to rein in the plastic pollution that is killing marine wildlife, harming human health and warming the planet.
Representatives of several nations and groups involved in the treaty talks expressed disappointment and frustration at the outcome but resolved to build on progress that was made, saying that no deal is better than a bad deal. Negotiators worked on a range of policy solutions including international financing to support waste collection, requirements for minimum recycled content in products and the global adoption of product designs to improve plastic recycling. But environmental advocates and nations in the high-ambition coalition say it is still critical to cut the overall amount of plastic produced around the world.
Intel CEO Gelsinger Retires; Zinsner And Johnston Holthaus Named Interim Co-CEOs
Intel CEO Pat Gelsinger has retired, the struggling chipmaker said Monday in a surprise announcement. Two company executives, David Zinsner and Michelle Johnston Holthaus, will act as interim co-CEOs while the company searches for a replacement for Gelsinger, who also stepped down from the company’s board. The apparent ousting of Gelsinger, whose career spanned more than 40 years, underscores the turmoil at Intel. The company was once a dominant force in the semiconductor industry but has been eclipsed by rival Nvidia, which has cornered the market for chips that run artificial intelligence systems.
Gelsinger started at Intel in 1979 at Intel and was its first chief technology officer. He returned to Intel as chief executive in 2021. Zinsner is executive vice president and chief financial officer at Intel. Holthaus was appointed to the newly created position of CEO of Intel Products, which includes the client computing group, data center and AI group and network and edge group.
U.S. Steelmakers to Trump: Bring On More Tariffs
Some U.S. steelmakers are backing President-elect Donald Trump’s plans for tariffs on Mexico and China. They also want him to go even further. The Steel Manufacturers Association wants tariffs to be reimposed on steel from the U.K., the European Union and Japan. The countries were included in Trump’s 2018 tariffs, but President Biden later allowed some steel to enter the U.S. without duties. Among the association’s members are Steel Dynamics and Nucor the largest U.S. steel producer.
The call for additional tariffs was part of a trade proposal the steel manufacturers group released Monday. It said the new duties would boost the domestic steel market and help address trade-distorting practices that it believes other countries are conducting. The U.S. currently has some of the world’s highest steel prices. But prices have been mostly stagnant in recent months amid lower demand from a weakened manufacturing sector, particularly the auto industry. Some steel-company executives have complained that the U.S. market is being undermined by lower-cost imports from China that are circumventing existing tariffs by being routed through Mexico.
Billionaire Fiat Heir Assumes Control Of Jeep And Ram Parent Stellantis After Embattled CEO Carlos Tavares Exits
The reign of Carlos Tavares at Stellantis is over. Once hailed as the very best manager the legacy car industry had to offer, the embattled CEO resigned Sunday, taking responsibility for a rapid and stunning decline at the Jeep and Ram parent company. Taking his place, for now, will be board chairman and Fiat heir John Elkann. In a statement about Tavares’s resignation, Stellantis said it has tasked the billionaire scion effective immediately with running a newly formed interim executive committee on top of his governance and oversight duties until a successor can be found.
The 48-year-old traces his lineage back to none other than great-great-grandfather Giovanni Agnelli, who laid the foundation for Italy’s auto industry when he built the Fabbrica Italiana Automobili Torino, or Fiat, in 1899 in the northern city of Turin. No modern Italian dynasty comes closer to being considered royalty than theirs. With tragedy a constant companion alongside fame, it has invited frequent comparisons with the Kennedy dynasty.
Maersk Completes Deal For 20 Dual-Fuel Vessels
A.P. Moller - Maersk (Maersk) has signed agreements with three yards for a total of 20 container vessels equipped with dual-fuel engines. Combined, the vessels have a capacity of 300,000 TEU. With these orders, Maersk concludes the intended owned newbuilding orders announced in the August 2024 update of the fleet renewal plan. The first vessels will be delivered in 2028, and the last delivery will take place in 2030.
The August fleet update further announced the intention to charter a range of methanol and liquified gas dual-fuel vessels totaling 500,000 TEU capacity. Maersk has now finalized these charter contracts across several tonnage providers. When phased in, the charter vessels will replace existing capacity.
The Port Of New York And New Jersey Is Seeking A Greater Share In Cargo Company Profits
The Port of New York and New Jersey is demanding a slice of transactions when terminals are bought and sold and looking for a larger piece of the revenues for business moving across its docks. It is also requiring cargo-handling tenants to spend more of their own money upgrading infrastructure. The port’s more aggressive approach is taking shape as ocean carriers report booming profits and multinational companies spend billions of dollars to acquire prized space at major ports.
Like other seaports around the world, the port raises revenue through its leasing agreements with various private terminal operators. The leases provide a steady source of revenue, but the port doesn’t reap the gains when cargo volumes surge. Leases at the New York-New Jersey port’s two largest terminals will be expiring over the next several years, including that of Maher Terminals, the port’s most valuable facility. Maher’s current lease holder, Australia-based infrastructure fund giant Macquarie Asset Management, is negotiating an extension of its agreement so that it can upgrade the terminal or sell it.
Rolls-Royce Wins $695M DoD Award for Engine Support
The U.S. Dept. of Defense awarded $695.3 million to Rolls-Royce Corp. in Indianapolis for support, program management, integrated logistics support, sustaining engineering, and maintenance and repair, reliability improvements, configuration management, and site support for the MV-22, CV-22, and CMV-22, AE1107C engine series. Rolls’ Indianapolis operation develops, assembles, and tests engines installed in defense aircraft and civil helicopters, regional and business jets, and naval and marine vessels. The new contract is a “firm-fixed price, indefinite-delivery, indefinite-quantity” assignment, and no competing bids were sought. According to the Pentagon announcement, the contract will be completed by November 2026.
The AE1107 is a 6,000-hp Rolls-Royce turboshaft engine that powers several variants of the Bell Boeing V-22 Osprey tiltrotor aircraft used for military transport and cargo aircraft with vertical and short takeoff and landing capabilities. The different variants of the V-22 are used by the U.S. Marine Corps (MV-22), U.S. Air Force (CV-22), and U.S. Navy (CMV-22.)
Read more at American Machinist
Nine Volkswagen Plants On Strike As Worker Rift With Management Deepens
Workers at nine Volkswagen car and component plants across Germany started two-hour strikes on Monday, bringing assembly lines to a halt as labour and management clash over the future of Europe's biggest carmaker. Workers on their morning shifts went on strike for two hours, while those on evening shift plan to leave work early in protest at the carmaker's demands, which include a 10% wage cut. An agreement not to stage walkouts ended on Saturday, enabling industrial action across VW AG's German plants.
Volkswagen has threatened to close plants in Germany for the first time in its 87-year history, saying it needs to reduce costs and boost profit as European carmakers struggle with weak demand, high production costs, competition from Chinese rivals and a slower-than-expected electric vehicle transition. At Volkswagen's main plant in Wolfsburg, which employs 70,000 people, a two-hour strike means several hundred cars, including the iconic Golf, cannot be built, union sources said. In addition to Wolfsburg and Hanover, which employs a further 14,000 staff, plants affected include Zwickau, VW's EV-only plant, where workers will strike on Monday and Tuesday.
Global Push For Cooperation As Space Traffic Crowds Earth Orbit
The rapid increase in satellites and space junk will make low Earth orbit unusable unless companies and countries cooperate and share the data needed to manage that most accessible region of space, experts and industry insiders said. A United Nations panel on space traffic coordination in late October determined that urgent action was necessary and called for a comprehensive shared database of orbital objects as well as an international framework to track and manage them. Global cooperation is essential to developing enforceable rules akin to those used by the International Civil Aviation Organization for air traffic, industry experts told Reuters.
Low Earth orbit must remain safe to prevent costly disruption to the technology behind global communication, navigation and scientific exploration. Yet there is no centralised system that all space-faring nations can leverage and even persuading them to use such a system has many obstacles. Whereas some countries are willing to share data, others fear compromising security, particularly as satellites are often dual-use and include defence purposes. Moreover, enterprises are keen to guard commercial secrets.