Member Briefing February 21, 2024

Posted By: Harold King Daily Briefing,

Top Story

Recession Signs Fade Despite 22nd Straight Drop in The Conference Board Leading Economic Index® (LEI) 

The economy may not be headed for imminent recession, but it is losing momentum. The Leading Economic Index's 0.4% decline in January corroborates the latest data showing activity only plodding forward into 2024 after sprinting for the better part of 2023. Retail sales, manufacturing production and residential construction all came in weaker than expected in January, while inflation was stronger than expected. The combination of slowing output and persistent price growth adds credence to a "higher for longer" interest rate environment, which would weigh on the already beleaguered LEI.

Stock prices marched higher over the month, consumer expectations and the new orders component of the ISM manufacturing index jumped, and initial jobless claims were essentially flat. Despite these positive developments, consumer sentiment and manufacturing new orders are rebounding from low levels, and the interest rate spread remains deeply inverted. Since these components are heavily weighted in the LEI, the monthly outturn was negative.

Read more at Wells Fargo

Global Manufacturing Activity Rose in January 

After contracting for 16 straight months, the J.P. Morgan Global Manufacturing PMI™ improved from  49.0 in December to 50.0 in January, stabilizing at the start of the new year. Output (up from 49.4 to 50.3) expanded for the first time since May, while the declines for new orders (up from 48.6 to 49.8), exports (up from 48.1 to 48.8) and employment (up from 48.7 to 49.5) each fell at slower rates.

 In addition, the outlook for future production (up from 60.6 to 62.5) strengthened to the best reading since April, with respondents more upbeat about the next six months. Yet, delivery times (down from 50.1 to 48.9) widened for the first time in 12 months. Input prices (up from 52.4 to 52.9) grew very modestly, slightly faster than in the previous survey.

Read more at Wells Fargo

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Policy and Politics

NYS Business Associations Unite On Budget Requests to Senate & Assembly

Business associations from across New York, including the Council of Industry, together sent a letter to the Assembly and Senate Majority and Minority Leaders requesting they use the Fiscal Year 2025 budget to address the Unemployment Insurance (UI) debt, as well as support the Governor’s proposals to sunset the state’s outdated COVID Sick Leave law, address the eruption of lawsuits over frequency of pay claims for manual workers, and combat the rise in retail theft.

New York remains one of the most expensive states in which to operate a business and these relatively small requests would help alleviate some of those expenses. “The following priorities of the business community were strongly advocated for in both the Fiscal Year 2024 budget and during the 2023 legislative session but were not acted upon and now require your urgent attention and action. With negotiations of the Fiscal Year 2025 budget underway, the State should include the following relief measures in the final spending package…” The letter reads.

Read the full letter here

Siena College Poll: New Yorkers Cool to Hochul, Worry About Cost of Living

Governor Kathy Hochul’s favorability rating, 41-46%, down from 45-42% last month, and job approval rating, 48-47%, down from 52-43%, each fell by net eight points from January, according to a Siena College poll of registered New York State voters released today. A majority of voters say Hochul is hard working, and pluralities think she is honest and is not corrupt, while voters are closely divided on whether she is effective or a strong leader, and a plurality of voters she is out of touch with average New Yorkers.

Nearly half of voters, 49%, identify the cost of living in New York as one of their top two issues for the Governor and Legislature to address, 29% calling it the top issue. The recent influx of migrants, crime, and affordable housing are New Yorkers’ next three top issues. “Another potential factor affecting how voters see Hochul is that a majority, 56%, continue to say that the quality of life in New York is getting worse, compared to only 14% who think it’s getting better, and 25% who say it’s staying about the same,” Greenberg said. “More than two-thirds of Republicans and independents think the quality of life in New York is getting worse, as do a plurality, 42%, of Democrats.

Read more at the Siena College Research Institute

SUNY New Paltz Engineering Seeks Sponsors for 2024 Senior Design Expo

Tom Nolen, Interim Dean of the School of Science & Engineering at SUNY New Paltz announces earlier this month that the 2024 Annual Engineering Design EXPO will take place in Science Hall on Friday, May 3rd, from 3 - 5 p.m. The design expo is one of the highlights of the academic year showcasing the projects worked on by students in collaboration with faculty and industry.

The department is looking for sponsors for this year’s event.  All sponsorship funds directly support the student projects and EXPO, and are 100% tax deductible. Your company will gain recognition on campus, in the community and beyond for your support of our future engineers. If you have any questions or wish to become a sponsor, please contact us at or call 845-257-3784.

Click here to view past EXPO projects

Click here for sponsor information

Health and Wellness

Covid Vaccines Linked To Small Increase In Heart And Brain Disorders, Study Finds—But Risk From Infection Is Far Higher

Covid vaccines from companies like Pfizer, Moderna and AstraZeneca were linked to rare occurrences of heart, brain and blood disorders, a recent peer-reviewed study found, though experts say the risks of developing Covid-19 greatly outweigh the risks of getting vaccinated. Researchers from the Global Vaccine Data Network—a research arm of the World Health Organization—looked at expected versus observed rates of 13 medical conditions that were considered “adverse events of special interest” in a study population of 99 million vaccinated people eight countries, making it the largest Covid vaccine study to date.

“The odds of all of these adverse events is still much, much higher when infected with SARS-CoV-2 (COVID-19), so getting vaccinated is still by far the safer choice,” CEO of biotechnology company Centivaix Jacob Glanville, who is not involved in the study, told Forbes.

Read more at Forbes

Election 2024

Trump Holds 23-Point Lead Over Haley in South Carolina: Poll – USA Today

Biden Campaign Touts $42M Raised in January – Politico

The President at the Center of an Odd Biden-Trump Debate: Herbert Hoover - WSJ

Trump Will Clinch Majority of Bound Delegates in Next Four Weeks, Campaign Asserts – The Hill

Real Clear Politics Latest GOP Primary Polls – Real Clear Politics

Real Clear Politics Latest General Election Polls – Real Clear Politics

Latest Polls - FiveThirtyEight


Industry News

Transportation Costs at 15-Month High

The GEP Global Supply Chain Volatility Index — an indicator tracking demand conditions, shortages, transportation costs, inventories and backlogs based on a monthly survey of 27,000 businesses — rose to -0.12 in January, from -0.44 in December indicating that spare capacity across global supply chains has shrunk notably. The most noteworthy impact from the Red Sea disruption was transportation costs, which rose to a 15-month high in January, as commercial ships took the lengthier route around the Cape of Good Hope.

Although this is the ninth successive month of excess capacity at global suppliers, the downturn eased to its weakest since last April. The index suggests that underlying trading conditions may be starting to improve as recession and inflation fears fade, and businesses prepare for a stronger 2024. Regionally, Asia's supply chains were at their busiest in nearly a year as factory purchasing activity in China, South Korea and India rebounded, suggesting manufacturers there are gearing up for growth. In a similar vein, suppliers to North America and Europe saw their spare capacity shrink during January.

Read more at Material Handling & Logistics

Consumer Sentiment Inches Higher

US consumers raised their optimism about the US economy for the third straight month in February to cap a week that offered investors a complicated picture. The initial read on consumer sentiment in February from the University of Michigan out Friday showed the index inched higher from January, suggesting "that consumers continue to feel more assured about the economy, confirming the considerable improvements in December and January across various aspects of the economy," said Joanne Hsu, director of the survey of consumers.

The index registered a reading of 79.6, up from the 79.0 seen in January's final look at sentiment but slightly below the 80 that was expected by economists. In Friday's report, Hsu noted, "Consumers continued to express confidence that the slowdown in inflation and strength in labor markets would continue." Hsu added: "Five-year expectations for business conditions rose 5% to its highest reading since December 2020."

Read more at Yahoo

Elon Musk Says Neuralink’s First Brain Chip Patient Can Control Computer Mouse By Thought

The first human implanted with a chip from Elon Musk’s computer-brain interface company Neuralink has recovered and can move a computer mouse with thought alone, the tech billionaire announced on Monday, a brief insight into the firm’s progress as it works towards restoring lost abilities like movement and sight and enhancing others like memory and intelligence.

The surgery, aided by Neuralink’s surgical robot, marked a milestone for the company and its efforts to directly connect brains to computers after it received permission in September to recruit patients to test the device’s ability to help people with paralysis regain lost functions by controlling computers with thought. “Progress is good,” the billionaire said, adding that the patient is suffering “no ill effects” the company is aware of. Musk said Neuralink eventually wants to “have more than just 2 buttons” and is trying to make progress on that front, which he described as “looking very good” overall.

Read more at Forbes

China’s Path Around U.S. Automotive Tariffs Goes Through Mexico

Chinese automaker BYD, short for Build Your Dreams, is scouting locations across Mexico for a factory that would be a launch point for shipments into the U.S. The plan shows rising enthusiasm in China’s fast-growing car industry for expansion to North America, despite political risks. China’s auto sector is already pushing into Mexico in response to the U.S.-Mexico-Canada trade deal encouraging carmakers in North America to use locally sourced content.

At least a dozen Chinese electric-vehicle parts suppliers have announced new factories or added to their investments there in recent years. BYD’s Mexico plan is part of a broader exporting strategy that has seen its low-price EVs gain traction in places including Europe and Southeast Asia. Western automakers have become more vocal about the potential threat these Chinese firms pose to their own EV plans.

Read more at The WSJ

The US Government Is Spending $1bn To Upgrade Airports

The United States Government will award around $1 billion in Airport Infrastructure Grants (AIGs). The investment package boasts 114 separate grants in 44 states and three territories (Puerto Rico, Guam, and the Northern Mariana Islands), with the allocated money spent on improving passenger facilities and promoting sustainability projects. The new funding announced last week is part of President Biden's Investing in America Agenda and has received bipartisan support from lawmakers as airports have continued to invest substantially in modernizing their facilities in the past few years.

These modernizations emphasize enhancing the passenger experience as these include new amenities for travelers that put passengers first, as airports across the United States have seen a rebound to levels matching or exceeding pre-pandemic levels. Among the projects to benefit from the investment are several major international airports, including United Airlines and American Airlines hub Chicago O'Hare International Airport (ORD). Multiple, smaller regional airports will also benefit and receive large infrastructure grants.

Read more at Simple Flying

Capital One to Buy Discover Financial in All-Stock Deal

Capital One’s $35 billion purchase of Discover would create one of the largest US credit card companies and a formidable new rival to American Express, Visa, and Mastercard. The question now is whether regulators will let it stand. The deal offers a test of how the Biden administration will treat a union of two financial giants at a time when a lot of other mergers hang in the balance due to antitrust reviews, from the tie-ups of air carriers Alaska and Hawaiian to grocery chains Kroger and Albertsons to amusement park giants Six Flags and Cedar Fair.

The purchase of Discover would likely make Capital One the biggest credit card lender in the US, bigger than even banking colossus JPMorgan Chase (JPM) in that measure. Capital One would gain a sizable credit card payment network of more than 300 million cardholders, allowing it to more heavily influence the fees that merchants pay when consumers use their cards and become a big player in that sector. "Currently, the big card networks in the US are Visa, Mastercard, Amex, and Discover," said Brian Quinn, a professor at Boston College Law School. "Any merger among those networks would definitely draw a high degree of scrutiny by regulatory agencies."

Read more at Yahoo

Port of LA Starts 2024 With Near Record Volume

On February 15, the Port of Los Angeles announced that it had  handled 855,652 TEUs in January, the second-best start to the year on record. This number was eclipsed only by the pandemic-induced cargo surge in 2022. It was the sixth consecutive month of year-over-year increases and surpassed January 2023 by 18%. January 2024 loaded imports landed at 441,763 TEUs, up 19% compared to the previous year. Loaded exports came in at 126,554 TEUs, an increase of 23% compared to last year.  The port processed 287,336 empty containers, up 14% over 2023.

“Two factors are driving our strong start,” Port of Los Angeles Executive Director Gene Seroka said in a statement. “First, cargo owners have been replenishing inventories and moving goods at a fast clip ahead of the Lunar New Year holiday, which will slow production in Asia. “Second, consumer spending and mostly strong economic data continue to accelerate the American economy.”

Read more at Material Handling & Logistics

Budget Cuts Expected to Reduce F-35 Output

The Biden Administration is expected to propose cutting the number of F-35 Joint Strike Fighter jets in its 2025 defense budget, which will be introduced in mid-March. The current plan calls for Lockheed Martin to produce 83 of the aircraft for the U.S. Air Force, U.S. Marine Corps, and U.S. Navy during 2025, though that total could drop to fewer than 70 if the Defense Department’s spending on the F-35 program is cut by $1.6 billion, as reported.

DoD previously estimated a 2025 budget of $880 billion in 2025 and a total national defense budget of $929 billion. A two-year budget deal agreed to by the Administration and Congress last summer set the 2025 defense budget at 1% above the 2024 level ($886 billion), meaning $895 billion.  The actual number of F-35s that may be produced under the proposed budget may be difficult to identify, as the cost of the fighter jets is being affected by the Technology Refresh-3 effort now underway to advance the F-35’s hardware and software for greater data processing power and speed, as well as to expand memory capabilities.

Read more at American Machinist

Will Electrification of Industry Live Up to its Promise?

To get the most out of all these renewable and electrification electricity needs to become even more versatile. One of the key challenges is providing heat to industry. If you want to dry, cure, melt, smelt, set, distil, reform or otherwise change the state of something, as industrial processing so often does, heat tends to be involved. In 2016 providing such “process heat” produced almost seven gigatonnes of carbon-dioxide emissions, roughly 20% of all those from fossil fuels.

The fact that electricity does not have much of a record of providing heat has led to the idea that these emissions are “hard to abate”. This is taken to mean that sorting them out needs new kinds of infrastructure. Innovative entrepreneurs and imaginative incumbents are finding ways to turn electricity into useful forms of heat, from scaled-up heat pumps of the sort used in some houses to space-age containers filled with white-hot molten tin and graphite plumbing. These technologies offer advantages in and of themselves. Heat from renewable or nuclear sources is safe from volatile fossil-fuel prices. In general, heat pumps are a lot more energy-efficient than combustion. Systems that store heat for later use, sometimes called “thermal batteries”, can be charged up when electricity is cheap, which is good both for owners and grid operators who increasingly want demand that can be managed.

Read more at The Economist