Member Briefing February 27, 2024
Eurozone Preliminary Manufacturing PMI Declines in February, Services Rebound
Meanwhile, the HCOB Flash Eurozone Manufacturing PMI from S&P Global slipped again in February following signs of stabilization in January, with the headline index dropping from 46.6 to 46.1. Output, exports and hiring each fell at faster rates in February, but the pace of decline for new orders improved marginally. Input prices also fell more slowly, with that measure at an 11-month high.
Nonetheless, the index for future output continued to reflect cautious positivity for modest growth in production moving forward despite some easing in February. The country-by-country preliminary data were mixed. German manufacturers were notably weaker in February, whereas there were improvements in the declines in France and, outside the Eurozone, in the United Kingdom.
Why Tech Companies are Laying Off Thousands of Workers
Major technology companies have cut thousands of jobs since the start of 2024 as the rise of artificial intelligence (AI) and interest rates upend the tech sector. While the U.S. job market remains remarkably strong on the whole, tech companies have cut nearly 40,000 jobs in the first two months of 2024, according to Layoffs.fyi. Just last week, Cisco announced plans to lay off about 4,250 employees, while PayPal said last month that it would cut about 2,500 jobs. Microsoft also said it would lay off about 1,900 workers in its gaming unit.
A year of explosive growth in AI is likely a key factor in the latest layoffs, experts told The Hill, as companies invest in developing the transformative technology. “Every product division … is experimenting with how to incorporate AI into their business model and their products and their functions,” said Daniel Keum, an associate professor of management at Columbia Business School. “That’s why you’re seeing they’re letting go some of the developers that are not related to AI, and they’re hiring new talents and people with expertise on AI,” he continued, adding, “You’re seeing a lot of reorientation, reprioritizing, repositioning across the board.”
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- Israel Says it Agrees to Cease-Fire, Hostage Release -Yahoo
- Netanyahu Says No Deal Yet on Gaza Cease-Fire, Remains Bullish on Rafah Operation – Politico
- U.S. Airman Dead After Setting Himself On Fire Outside Israeli Embassy - Forbes
- Israel Strikes Eastern Lebanon for First Time Since Gaza War Began - Politico
- Palestinian Prime Minister Shtayyeh Resigns – Reuters
- Will the White House Fight for a Palestinian State? – The Atlantic
- Gaza Desperately Needs More Aid but Agencies Can’t Cope - 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
- Ukraine and Russia: The Latest News – The Guardian
- Navalny Was Close to Being Freed in Prisoner Swap, Says Ally - Reuters
- Ukraine War: Indians ‘Duped’ by Agents Into Fighting for Russia - BBC
- Footage Appears to Show Ukrainian Drones Destroying Prized Russian Armor – Yahoo
- ‘Judas’: Russian Deserter’s Father Slams Dead ‘Traitor’ Son, Local Media Reports – Politico
- Kremlin Shrugs Off Latest Western Sanctions Against Russia – Reuters
- How Russia Dodged Sanctions, in Seven Charts - 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
- Video: Inside the Making of an AI Chip - WSJ
- It’s Official: Sweden to Join NATO - Politico
- China Warns EU, UK of ‘Negative Impact’ After Firms Blacklisted – Politico
- Jair Bolsonaro: Brazil's Former President Denies Coup Allegations - BBC
- U.S. and South Korea Fly Warplanes in Interception Drills After North Korea’s Missile Test - NBC
- Satellite Images Reveal Floating Barrier at Mouth of Disputed Atoll in South China Sea – Reuters
- Bears, Cars and Angry Farmers Fuel Green Backlash – Politico
- Argentina Markets Double Down on Milei as Investors 'Start to Believe' – Reuters
Policy and Politics
Biden Calls Leaders to White House as Shutdown Looms, Ukraine Aid Stalls
The president has called the meeting for Tuesday, seeking to break a logjam. House and Senate leaders have been working to negotiate the details of 12 funding bills totaling $1.6 trillion for federal agencies, which have been operating on temporary extensions since Sept. 30. Funding for the Transportation Department and several other agencies expires after March 1, which would affect some housing, food and veterans’ programs; the rest expires after March 8.
Along with keeping the government open, Biden has made it a priority to get billions of dollars in fresh aid to Ukraine as its war against Russia enters a third year. But with many conservatives backing him, Johnson has so far refused to bring up for a vote a Senate-passed package including money for Ukraine, Israel and Taiwan, because he is insisting on border restrictions that Democrats won’t accept. Democrats and some Republicans are considering fallback options, including a discharge petition, to pass the aid without Johnson’s support.
NY Dems Toss Bipartisan Congressional Map
The state Legislature has officially rejected a proposal from the Independent Redistricting Commission to enact new congressional maps. Lawmakers will now need to draw and approve their own map. In the state Senate 40 members voted to reject the legislation and 17 voted in favor of the Independent Redistricting Commission map. The Assembly rejected the IRC map 47-99. Republicans lambasted Democrats for rejecting the map that experts from both parties agreed upon through the independent redistricting process as laid out in the state constitution.
Under current state law, legislators may need to keep any changes they make to the Independent Redistricting Commission map to a minimum thanks to a 2012 statute that places a 2% limit to legislative tweaks. That amounts to shifting around only 15,000 people per district. According to Jeff Wice, senior fellow at New York Law School’s redistricting institute, lawmakers would be wise to stick to the rule unless they introduce language to repeal or amend it before enacting their own maps. “There are options, but just to say ‘ignore it’ could be at peril of a lawsuit,” Wice said. He noted that the Court of Appeals decision that permitted the IRC to even draw more maps directly referenced the 2% rule.
Supreme Court Seems Ready to Block a Biden Plan on Air Pollution
The Supreme Court heard arguments on the Environmental Protection Agency’s (EPA) interstate air pollution rule Wednesday, with members of the court’s liberal minority expressing skepticism about the appropriateness of hearing the case but the conservative majority seeming amenable to blocking the rule. The “Good Neighbor” rule, which regulates downwind air pollution produced by upwind states, is the subject of a lawsuit by industry groups and the states of Indiana, Ohio and West Virginia.
The Clean Air Act allows states to develop their own interstate pollution plans but enables the EPA to step in with its own if it deems state plans inadequate. State plaintiffs have argued they were not given enough time to comply. Environmental groups expressed dismay at the prospect of the court blocking the Good Neighbor rule Wednesday.
Health and Wellness
Measles Cases Are Surging. Here Are The Challenges And What You Can Do
Measles is having a field day across the world, including the United States. This devastating and potentially deadly disease is so contagious that any small opening we give it to spread has overwhelming consequences. The United States has several recent hot spots of spread that have raised public health alarm bells. As of February 22, there were 35 cases across 15 states. The numbers are currently on track to exceed those reported each year since the last major surge in 2019.
Measles just happens to be the most contagious infection there is, with an R0 of 12 to 18. That means, for a single person who has measles, they can spread it to 12 to 18 others, on average. With such a high number, it is not hard to see how things can get out of control very quickly. Because it is so contagious, in order to keep measles under control, immunity among the population has to be maintained at extremely high levels, at a minimum of 95%. People can gain immunity from either natural infection or vaccination. The United States used to achieve this level; however, due to several factors, including religious exemptions, increased numbers of individuals with immune-related disease who can’t be vaccinated and most importantly, growing mistrust of vaccines, the U.S. measles vaccination level has dropped.
Election 2024
- Why Democrats May Kill a Bipartisan House Map in New York – NY Post
- To Understand Trump’s Staying Power With the White Working Class, Look at Michigan - WSJ
- Republican Party Chair Ronna McDaniel Will Step Down On March 8 - Forbes
- Hidden in Trump’s Big South Carolina Win: A Not-So-Small Problem for Him in November – Politico
- When Is Super Tuesday and What to Know - NYT
- 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
Global Steel Production Inches Forward
Global steel production rose more than 8.0% from December to January, up to 148.1 million metric tons across 71 nations. Still, the new figure is merely 0.5% higher than the January 2023 output, as major producing markets continue to take a flatline approach to steel production. The exception, of course, is the Chinese market, which dropped -6.9% below its year-ago total. Monthly raw steel production data is provided by the World Steel Association. In the past year, monthly production has wavered within a very narrow range, and World Steel has cited falling demand from industrial and construction markets for only minor growth in steel consumption.
In a typical month China’s steel industry produces more than all the rest of the world’s producers combined. For January, the total output was 77.2 million metric tons of raw steel, or about 52.0% of the world’s total. That figure represents a 12.7% rise over the December result but is -6.9% below the total reported for China in January 2023, and point toward the ongoing downsizing of the Chinese steel industry as well as uncertain demand from industrial and construction sectors there. The U.S. steel industry produced 6.8 million tons of raw steel in January, the same amount that it produced in December, and virtually even (-0.3%) with the January 2023 result.
Read more at American Machinist
Genentech’s Xolair Dramatically Reduces Kids’ Life-Threatening Reactions to Food Allergen Traces
An injectable drug used for decades to treat asthma substantially reduced potentially life-threatening reactions in children with an allergy who were exposed to trace amounts of peanuts, eggs, milk and cashew, according to new research. The Food and Drug Administration earlier this month approved omalizumab, marketed as Xolair, to treat severe food allergies in certain adults and children 1 year old or older. The injection is the first medicine to reduce allergic reactions to multiple foods following accidental exposure.
The study was published Sunday in the New England Journal of Medicine and presented at the American Academy of Allergy, Asthma & Immunology Annual Meeting. According to the study, nearly 67 percent of participants who completed the antibody treatment— 79 of 118 treated children and adolescents— could consume the equivalent of 2.5 peanuts without a moderate or severe allergic reaction, up from less than half a peanut at the outset. The treatment yielded similar outcomes for egg, milk, wheat, cashew, walnut and hazelnut.
German Business Sentiment Brightens Slightly, Despite Signs of Recession
Germany business sentiment improved a little in February, as expectations for the near-future of the economy recovered somewhat, signaling that some of the weaknesses plaguing the economy could be fading. The Ifo business-climate index rose to 85.5 in February from 85.2 in January, data from the Ifo Institute showed Friday. The headline index was driven higher by a better reading of business expectations for the next six months, while Ifo’s measure of current conditions of the economy held steady.
Still, overall the index remains close to a postpandemic low and suggests the German economy continues to shrink in the first quarter of the new year, Franziska Palmas, an economist at Capital Economics, wrote in a research note. Earlier Friday, official figures showed the German economy shrank 0.3% on quarter in the final three months of 2023, hurt by weak investment. Another quarter of contraction would mean Europe’s largest economy sank into a technical recession in the winter. Manufacturing—traditionally a key component of Germany’s economic output—remains in an especially weak spot, with the sector-specific business-climate index falling and assessments of the current situation there the weakest since September 2020, Ifo said.
Buffett Letter to Shareholders: A Pile of Cash and an Ode to Charlie Munger
Berkshire Hathaway posted a 28% fourth-quarter increase in operating earnings and announced its cash pile had reached a record $167.6 billion, as CEO Warren Buffett used his annual letter to shareholders to eulogize longtime business partner Charlie Munger, who died in November. Fourth-quarter operating earnings came in at $8.5 billion, up from $6.6 billion in 2022, as the conglomerate’s total operating earnings for the year rose to $37.4 billion, up from $30.9 billion the year before. The company’s operating earnings, which includes profits from its railroad, utilities and insurance businesses, were largely driven by big gains in the insurance sector in the fourth quarter—though railroad and utilities profits both dipped.
Buffett also remembered Munger as “the architect” of Berkshire Hathaway, describing him as the “general contractor” charged with carrying out “the day-by-day construction of his vision.” He described Munger as “part older brother, part loving father,” a figure who “never sought to take credit for his role as creator but instead let me take the bows and receive the accolades.”
Natural Gas Hasn’t Been This Cheap in Decades
An unusually warm winter and roaring U.S. output have pushed natural-gas prices to some of the lowest levels of the shale era. Adjusted for inflation, natural-gas futures recently hit their cheapest prices since trading began on the New York Mercantile Exchange in 1990. This is good news for American consumers, who can look forward to lower utility bills, as well as for businesses that use a lot of natural gas making basic materials like steel, concrete, cardboard and fertilizer. Americans’ gas costs in January were about 18% lower from a year earlier, according to the Labor Department.
But the plunge is weighing on gas producers, who are dialing back their drilling plans and pushing for more exports to relieve the domestic glut. Natural-gas futures for March delivery ended this past week at $1.603 per million British thermal units, down 35% from a year ago. On Tuesday, futures closed at $1.576, an inflation-adjusted all-time low.
Subaru Plants in Japan Restart More Than Week After Worker Death
Subaru Corporation released its first official statement on the plant shutdown in Gunma, Japan. I reported previously in two other reports that a factory worker's accidental death shut down production of the 2024 Subaru Forester, Crosstrek, Impreza, WRX, and BRZ that are manufactured for U.S. customers. Subaru says the plant resumes plant operations today. Here is the official statement from Subaru Corporation.
"On February 13, 2024, a workplace accident occurred at the Yajima Plant, one of our Gunma Manufacturing Plant facilities, resulting in the loss of an employee. We extend our deepest condolences to the deceased and his family. From the day of the accident, we sequentially suspended operations at all facilities of the Gunma Manufacturing Plant, prioritizing the deceased's family and employees working at the plant. We took the time to carefully consider measures to ensure our employees' safety and peace of mind and prevent such accidents from happening again. After a thorough review, we have decided to resume operations as outlined below. As we resume operations, we will further strengthen our commitment to prioritizing the safety of our employees."
Raytheon and Rafael to Expand Iron Dome Missile Production
Raytheon and Rafael Advanced Defence Systems, a joint venture dubbed RS2, has begun construction of new factory in Arkansas, US, which will be used to expand production of Iron Dome air defence system. The facility will produce the Tamir missile for the Iron Dome weapon system and its variant, the SkyHunter missile, which is to be used by the US Marine Corps (USMC) and US allies.
Raytheon said the development marked a US$63 million investment and would build on parent company RTX’s existing production capacity at the Highland Industrial Park, also in Arkansas. Rafael has been gearing up for a major export contract for Iron Dome which has been planned to be signed with the USMC. It will include three batteries of systems consisting of 44 launchers and 1,840 interceptors.
2023 EEO-1 Data Collection to Open April 30 With June 4 Deadline
EEOC has updated its EEO-1 data collection website to announce the data collection for the 2023 EEO-1 Component 1 reports will open April 30, 2024. The Agency has set June 4, 2024 as the deadline for reporting. The notice also indicates the “online Filer Support Message Center (i.e., filer help desk) will also be available on Tuesday, April 30, 2024, to assist filers with any questions they may have regarding the 2023 collection.”
Further information about data specifics and other filing instructions are not yet available. As a reminder, employers with 100 or more employees are required to file the annual EEO-1 Component 1 report. The filing requirement applies to federal contractors with 50 or more employees.
Japan Moon Lander Survives Lunar Night
Japan's Moon lander has survived the harsh lunar night, the sunless and freezing equivalent to two Earth weeks. "Last night, a command was sent to #SLIM and a response received," national space agency Jaxa said on X. The craft was put into sleep mode after an awkward landing in January left its solar panels facing the wrong way and unable to generate power. A change in sunlight direction later allowed it to send pictures back but it shut down again as lunar night fell. Jaxa said at the time that Slim (Smart Lander for Investigating Moon) was not designed for the harsh lunar nights.
Jaxa said that communication with the lander was terminated after a short time - it was lunar midday, meaning the temperature of the communications equipment was very high. Jaxa said preparations were being made to resume operations when instrument temperatures had cooled sufficiently. During its previous brief period of re-awakening, Slim was able to study its surroundings in detail and transmit new images to Earth.