Member Briefing February 15, 2022
What Conflict in Ukraine Would Mean for Oil, Gas and Food
The U.S. has warned that Russia could attack its neighbor as early as this week, even though Moscow has repeatedly denied it plans to invade. Markets have been on edge for weeks, and an actual conflict — or sanctions on Russia — could drive energy and food prices even higher, and push Europe into a major supply crisis.
Crude oil is approaching $100 a barrel and gas in Europe surged on Monday. Aluminum is heading toward a record high and palladium has risen this year, while wheat continues to gain. The crisis “could spawn a butterfly effect, sending commodity prices spiraling higher as supply woes multiply,” analysts at Bloomberg Intelligence said in a recent report. “Sanctions could usher in shortages of food and energy, causing prices of both to soar.”
U.S.-Canada Bridge Reopens After Police Clear Protesters
North America’s busiest trade link reopened for traffic late Sunday evening, ending a six-day blockade, Canada Border Services Agency said, after Canadian police cleared the protesters fighting to end COVID-19 restrictions. Canadian police made several arrests on Sunday and cleared protesters and vehicles that occupied the Ambassador Bridge in Windsor, Ontario, after a court order on Friday.
In Ottawa, counter protests started blocking vehicles trying to join the protests on Sunday, with residents losing patience over the three-week-old demonstrations. In the western Canadian province of British Columbia, the Pacific highway border crossing in Surrey was temporarily closed on Sunday afternoon, for a second day, by a group of about 200 protesters, according to a Reuters photographer on the scene. A small group of protesters gathered on U.S. side of the border, blocking incoming vehicles.
What Should We Make of all the Latest Manufacturing Numbers?
American manufacturing leaders are paying attention to the increasingly complex circumstances they face—and they are quite confused. As we have said before COVID-19 has been very disruptive to the sector and has accelerated many trends that manufacturers were experiencing for more than a decade. Now things like labor shortages and supply chain issues have but askew many of the datapoints that we have for decades used as signposts for decision making.
The latest data on manufacturing are, in fact, mystifying in their extremes. Where is the light at the end of the tunnel? Following are a selection of numbers that help highlight the current state of U.S. manufacturing.
Electric Vehicles May Have Been the Real Winners of Super Bowl LVI
With electric vehicle sales accounting for 9 percent of global new car sales in 2021, it’s not surprising that Super Bowl commercials this year were saturated with advertisements for electric vehicles, with major players like Kia, BMW, General Motors and Chevrolet — and newcomer Polestar — doubling down on already-massive marketing campaigns touting completely battery-powered rides.
Here’s a rundown of the Super Bowl ads reflecting a changing auto industry.
US COVID-Republicans Call on Biden to End COVID’s Public Health Emergency Designation
Republicans in Congress have asked President Biden to end the designation of COVID-19 as a public health emergency (PHE), citing the accessibility of vaccines and effective treatments as well as the harms of long-term isolation on public health. Their request for the president to undo the designation comes as calls grow — including from former Biden advisers — for the federal government to chart a course for the next stage of the pandemic.
Coronavirus cases and hospitalizations have plunged after the dramatic omicron-driven surge, and deaths have begun falling as well, though the seven-day average was still 2,300 deaths per day, as of Thursday.
NYS Vaccine and COVID Update –
Vaccine Stats as of February 14:
One Vaccine Dose
- 88.3% of all New Yorkers – 16,306,810 (plus 3,429 from a day earlier).
- In the Hudson Valley 1,695,142 (plus 423).
- 74.9% of all New Yorkers – 14,540,738 (plus 6,579).
- In the Hudson Valley – 1,482,026 (plus 448).
- All New Yorkers – 6,788,516
- In the Hudson Valley – 813,172
The Governor updated COVID data through February 14. There were 48 COVID related deaths for a total reported of 68,254.
- Patients Currently in Hospital statewide: 3,524.
- Patients Currently in ICU Statewide: 585
7 Day Average Positivity Rate – Cases per 100K population
- Statewide 3.08% – 23.89 positive cases per 100,00 population
- Mid-Hudson: 2.97% – 21.12 positive cases per 100,00 population
Are we Requiring Booster Shots?
Decisions on vaccination policies—whether to require them for employees, especially after the Supreme Court blocked the rule that large companies would have to mandate vaccines for their workers—have been among employers’ biggest and most complex problems in recent months. Now they’re faced with a new variable: whether to require booster shots.
“Companies are struggling with this one,” says Brian Kropp, chief of research in the Gartner HR practice. “There’s complexity around the timing: You might have a situation where the base had their two shots more than six months ago, and then you say they’re not fully vaccinated. There’s complexity in managing that definitional process.”
Even Among the Vaccinated, Covid-19 Prompted a Surge of Sick Days
The number of workers taking time off because they were sick with Covid-19—or caring for someone else who was—surged at the beginning of the year, topping another leading cause for missing work: caring for children who were out of school because of the pandemic.
A major difference between January 2021’s surge and the one last month is that many of the workers are now vaccinated. About 87% of adults who did any work at the beginning of the year were vaccinated, according to the Census survey. About 6.6 million vaccinated workers and 2.1 million unvaccinated ones were out sick at the beginning of the year. So who were the most likely to get sick and miss work?
Inflation Is Everywhere, Including Places You Might Not Expect
While companies have been sounding the alarm on inflation for the past year, economists were mostly playing down the rising prices as a temporary disruption caused by the reopening of the economy. Instead, inflation has persisted and recently hit its highest rate in four decades. To preserve profits, companies are passing along more price increases to customers as inflation shows no signs of slowing down.
“It kind of cascades from initially a small set of goods to a much larger set of goods,” said Chester Spatt, who was chief economist at the Securities and Exchange Commission from 2004 to 2007 and is now a professor of finance at Carnegie Mellon University. Rising prices aren’t the main problem with inflation, he said; it is that prices are rising by different amounts at different times. As some prices rise more than others, companies and consumers might change their spending plans, something that can affect the economy as a whole.
The Inflationary Boom is Skipping Asia
Inflation has surged to multi-decade highs in much of the world. But across most of Asia’s large economies, such as China and India, the pressure is far less extreme. The much more modest pace of price increases can be put down to three big “F” factors: food, freight and fun. The global price of wheat is up by around 20% year on year but rice—the staple in many Asian economies—is down by around the same amount. Shipping-container prices have exploded for exports leaving Asia but the return trips cost barely more than a tenth of that in some cases. The more gradual easing of covid-induced restrictions means the cost of leisure activities has not picked up as much either.
There are still threats from a fourth “F”: foreign-exchange rates. If America’s Federal Reserve raises interest rates rapidly, a stronger dollar will increase import prices for many Asian economies. That will put central banks in the region in a tough spot.
One Party Rule
New district lines in New York could help fortify Democratic dominance in the statehouse for years to come, significantly increasing the odds that they will protect, and potentially expand, the veto-proof majorities they already command.
For congressional Districts Democrats edge went from 19-8 to 22-4, thanks to a plan that linked conservative Staten Island with Brooklyn’s trendy Park Slope and gave House Judiciary Chairman Jerry Nadler a district that snakes from the palisades of Upper Manhattan to the beaches of Bensonhurst. This seems in violation of New York law, but those familiar with how New York courts handle election law have little doubt it will stand.
Canada’s Trudeau to Use Emergencies Act
Canadian Prime Minister Justin Trudeau told his caucus he plans to use the Emergencies Act to handle ongoing protests in the country, according to reports. During the meeting with the Liberal caucus on Monday, Trudeau added that there were no plans to deploy the military at this time, CBC reported.
The Emergencies Act gives the prime minister the authority to deal with public welfare, public order, international and war-related emergencies. Specifically, it allows the prime minister to “take special temporary measures that may not be appropriate in normal times,” the outlet added. It is intended for a time of national emergency, which is defined as an “urgent and critical situation” that “seriously endangers the lives, health or safety of Canadians and is of such proportions or nature as to exceed the capacity or authority of a province to deal with it.”
Lockheed Martin Terminates $4.4 Billion Deal to Acquire Aerojet Rocketdyne
U.S. arms maker Lockheed Martin Corp said on Sunday it terminated its plan to acquire rocket engine maker Aerojet Rocketdyne Holdings Inc for $4.4 billion. The move comes after the U.S. Federal Trade Commission voted unanimously last month to sue to block the deal over antitrust concerns. The merger, drew criticism as it would give Lockheed a dominant position over solid fuel rocket motors — a vital piece of the U.S. missile industry.
After Lockheed ended the deal, Aerojet Rocketdyne issued a statement indicating it is “poised to deliver substantial value to our shareholders driven by our continued leadership in key space exploration and defense growth markets, including by advancing hypersonics and strategic, tactical and missile defense systems.”
Avocados from Mexico?
The U.S. confirmed over the weekend that it suspended Mexican avocado imports because of a threat received by a U.S. Department of Agriculture inspector working in Mexico. The inspector works to ensure Mexican avocados pose no risks of disease or insect infestation to U.S. crops. The ban hits an industry with almost $3 billion in annual exports.
“U.S. health authorities … made the decision after one of their officials, who was carrying out inspections in Uruapan, Michoacan, received a threatening message on his official cellphone,” the department wrote. The import ban came on the day that the Mexican avocado growers and packers association unveiled its Super Bowl ad for this year. Mexican exporters have taken out the pricey ads for almost a decade in a bid to associate guacamole as a Super Bowl tradition.
Where Will the Next Coronavirus Variant of Concern Come From?
Mutation is a random process, which is why successful new variants are more likely to come from places where lots of mutation is occurring. Researchers at Airfinity, a life-sciences data firm, hypothesize that this will occur where few people have had the jab and where many suffer from weakened immune systems. Immunocompromised people tend to harbour the virus for longer because their bodies struggle to fight it off, giving more time for successful mutations to accumulate. They are also less likely to produce antibodies after being vaccinated, meaning they have less protection against reinfection.
Airfinity’s researchers concluded that Burundi, Tanzania, the Democratic Republic of the Congo, Yemen and Nigeria are most at risk of producing a new variant. By January 29th, less than 6% of people living in the four African countries had been fully vaccinated against coronavirus. In Burundi, the country the researchers found to be by far the most at risk, that figure was just 0.05%.