Member Briefing January 12, 2023
EY CEO Outlook Pulse January: CEOs are Downbeat
Divergent views on the economic outlook among global CEOs underline the uncertainty that looks set to define the business environment in 2023. An EY study of 1,200 CEOs globally finds that while almost half of respondents foresee a moderate slowdown in the global economy, more than half fear a recession worse than the global financial crisis for the period 2008-10 in terms of its length and severity. Key findings include
- CEOs are downbeat on the global economic outlook and their own sector but are drawing on pandemic lessons to navigate headwinds and a likely recession.
- Geopolitics is heavily influencing M&A strategies as CEOs focus investments on politically like-minded shores.
- CEOs are embedding ESG into strategy to create brand value and build trusted relationships with customers, employees and other stakeholders.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Russia Replaces General in Charge of Ukraine War in Latest Military Shake-Up – The Guardian
- How Moscow Has Partly Recovered From Its Military Setbacks – Foreign Affairs
- Will Russia Launch Another Mobilization Drive? - DW
- Gazprom in Search of New Natural Gas Markets After Exports to Europe Plummeted in 2022 – Natural Gas Intelligence
- Fighting Rages Over Ukraine's Soledar Despite Mercenaries' Claim of Control – Reuters
- Who Controls Soledar and Why it Matters - BBC
- U.S., Allies Prepare Fresh Sanctions on Russian Oil Industry - WSJ
- Britain Discusses How to Send ‘Game-Changing’ Tanks to Ukraine – Politico
- Poland to Send Leopard Tanks to Ukraine, if Others Do, Too – ABC News
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Yellen to Stay on as Biden's Treasury Chief as Debt Fight Looms
Treasury Secretary Janet Yellen has told President Joe Biden she will remain in her post for the next two years as the White House faces growing challenges including the need to raise the nation’s borrowing limit, people familiar with the matter said. Yellen, whose decision has been the subject of internal chatter for months, agreed to a request from Biden to stay on in the administration’s top economic policymaking post during a recent one-on-one meeting.
Another official close to Yellen said that while she weighed returning to private life, she has remained energized about the implementation of policies enacted during Biden’s first two years. These include hundreds of millions of dollars in tax credits for electric vehicles and semiconductor manufacturers, and new money for Internal Revenue Service tax enforcement. She has also been the point person on the administration’s efforts to implement a global price cap on Russian oil exports.
FAA System is Restored After Outage Halts all Domestic Departures in the U.S.
Flights across the United States resumed Wednesday morning, several hours after the Federal Aviation Administration suffered a computer outage that forced it to halt all departures nationwide while it scrambled to resolve the issue. The FAA said the crippling delays that affected thousands of flights appear to have been caused by a problem in the Notice to Air Missions (NOTAM) system, which sends pilots vital information they need to fly. Transportation Secretary Pete Buttigieg said they have not completely ruled out the possibility of a cyberattack, but so far "there is no direct indication of any kind of external or nefarious activity.”
The FAA lifted the ground stop around 8:50 a.m. and normal air traffic operations began resuming gradually. But by then airports across the country were already crowded with frustrated travelers and a backlog of flights. As of noon, more than 7,300 flights within, to and out of the U.S. were delayed, according to the online flight tracker FlightAware. More than 1,100 flights were listed as canceled.
U.S. COVID – Biden Administration Extends Covid Public Health Emergency
The Biden administration has extended the Covid-19 public health emergency until April as a highly transmissible omicron subvariant stokes concern that the U.S. may face another wave of hospitalizations from the disease this winter. “The COVID-19 Public Health Emergency remains in effect, and as HHS committed to earlier, we will provide a 60-day notice to states before any possible termination or expiration,” a spokesperson for the Health and Human Services Department said.
The emergency declaration has had a vast impact on the U.S. health-care system over the past three years. It has protected public health insurance coverage for millions, provided hospitals with greater flexibility to respond to patient surges and expanded telehealth. Last month, Congress severed the Medicaid protections from the public health emergency and said states could start withdrawing people from Medicaid in April if they no longer meet the eligibility requirements.
WHO Urges Travelers to Wear Masks as New COVID Variant Spreads
Countries should consider recommending that passengers wear masks on long-haul flights, given the rapid spread of the latest Omicron subvariant of COVID-19 in the United States, World Health Organization (WHO) officials said on Tuesday. In Europe, the XBB.1.5 subvariant was detected in small but growing numbers, WHO and Europe officials said at a press briefing.
Passengers should be advised to wear masks in high-risk settings such as long-haul flights, said the WHO's senior emergency officer for Europe, Catherine Smallwood, adding: "this should be a recommendation issued to passengers arriving from anywhere where there is widespread COVID-19 transmission".
Hochul Describes Her Vision of the 'New York Dream.' Now She'll Have to Convince Lawmakers.
During her second State of the State speech the newly-elected governor on Tuesday introduced a plan to restore access to what she calls the “New York Dream,” one in which people “feel safe in their communities and supported by their government.” Hochul’s main driver to turn the tide is housing: She unveiled a massive plan called the Housing Compact that aims for 800,000 new homes in the next decade with specific growth targets for each municipality. She earned a standing ovation for announcing a minimum wage increase above the current $15 that is tied to inflation.
. Lawmakers were optimistic but measured in their reactions. The address is a good indication of the administration’s priorities, but never holds the details that could make or break consensus on top issues. She will introduce her budget proposal by month’s end for the fiscal year that starts April 1.
Regents: Individualized Plan for Every Child Might Help Students Recover from Pandemic Learning Losses
The state Education Department is piloting a program that could create an individualized education plan for every student. Dubbed Multi-tiered System of Supports – Integrated, the program was rolled out at 29 school districts. The goal of the program is to vastly improve results for students at a time when data shows them far behind because of the pandemic. Grades, attendance and discipline all show that the situation has worsened.
The new program uses that data to help teachers and administrators quickly identify and respond to students’ needs and collaborate on solutions. One goal is to work smarter, not harder, using evidence-based practices that solve problems more effectively. “Seems to me that we’re heading for an IEP for all students with the data to support it,” said Regent Roger Tilles. An IEP is a learning plan developed by public school staff — in consultation with parents — for children who receive special education services.
U.S. Container Imports Tumbled Close to Prepandemic Levels in December
American ports handled 1,929,032 inbound containers in December, measured in 20-foot equivalent units, or TEUs, down 1.3% from November, according to a report released Tuesday by Descartes Datamyne, a trade intelligence database owned by supply-chain software company Descartes Systems Group Inc. December marked the lowest level for seaborne imports since June 2020, just before a pandemic-driven rush to restock depleted inventories triggered a surge in imports.
The December box volumes were 19.3% behind container imports the same month the year before, Descartes Datamyne said, and 1.3% greater than December 2019, before the spread of Covid and city lockdowns in early 2020 sent global trade spiraling downward. Signs are pointing to U.S. international trade declining amid a broader global slowdown as inflation takes a toll on consumer demand. U.S. imports by value dropped 6.4% from October to November, the Commerce Department said last week.
Boeing Boosts Annual Orders and Deliveries, but Still Lags Behind Airbus
Boeing Co. boosted deliveries of jets last year, ratcheting up production after its 737 MAX crisis and the pandemic, but it still fell well short of archrival Airbus SE, which continued to outdistance Boeing as the world’s biggest jetliner maker. Boeing boosted deliveries by 41% in 2022 over the previous year. “As the airline industry expands its recovery, we are seeing strong demand across our product family,” Mr. Deal said.
Airbus increased its annual deliveries by 8%, but has been churning out planes at a much faster clip. After the near-hibernation of the airline industry during the pandemic, Airbus and Boeing have ramped up production to sate booming demand from airlines. That pace has at times tested suppliers’ ability to get parts to the plane makers fast enough. Airbus said Tuesday it delivered 661 aircraft to customers last year. That missed analyst expectations of a tally of about 680 jets after the company lowered its guidance in December. Boeing said it delivered 480 commercial jets, marking the fourth consecutive year it handed over fewer than Airbus.
Rockland Community College Offering Training and Support for Industry Professionals to Become Instructors
One of the biggest challenges to building an effective workforce development program in the Hudson Valley is a lack of instructors in the trades. The “From Industry to Instructor: Teaching for Professionals” program is designed for professionals interested in teaching one or more college-level courses. It will help you understand the skills and techniques you will need to be a successful instructor.
The College welcomes residents with knowledge and skills acquired over years in industry, such as scientists, IT/cyber security professionals, engineers, Mechanics, Welders, lawyers, nurses, linguists, and business people, employed or retired, who are interested in sharing their knowledge and skills with students. You can help our students become real world ready by sharing your professional expertise and experience.
Apple/Samsung Supplier BOE Plans New Factories in Vietnam
Chinese display maker BOE Technology Group Co Ltd a supplier of both Apple Inc (AAPL.O) and Samsung Electronics Co Ltd, plans to invest a substantial sum to build two factories in Vietnam, two people familiar with the matter said. The investment may total up to $400 million, one of them said. BOE is in talks to rent dozens of hectares of land in north Vietnam to add to its relatively small plant in the south that supplies mostly television screens.
The plan underscores efforts by technology firms led by U.S. iPhone maker Apple and Taiwanese device assembler Foxconn to lower supply chain exposure to China amid trade and geopolitical tension between Beijing and Washington and production disruption caused by China's COVID-19 containment measures.
Wells Fargo Changing Its Mortgage Playbook
Once one of the biggest mortgage lenders in the U.S., Wells Fargo has unveiled plans to step back from the housing market. Instead of going after the entire industry (its previous goal was a 40%-50% market share), the bank is shrinking its mortgage portfolio by restricting loans to only bank clients and minority borrowers. While the business was one of the company's biggest profit generators over the years, things have gotten tougher amid regulatory pressure and higher interest rates.
That's not all: Wells Fargo is shuttering its Correspondent lending business, in which the bank lends capital to other firms that sell mortgages as distinct providers. It's a big deal, as the division accounted for nearly 40% of its mortgage volume as of Q3 2022. Wells Fargo is also reducing the size of its Servicing portfolio by selling billions of dollars worth of mortgage servicing rights to other players in the sector.
Domestic Crude Production Climbs, Demand Falls and Inventories Surge
U.S. commercial crude inventories, which trailed historic averages throughout 2022 amid growing demand, flipped to a surplus to start the new year. With consumption now falling and production relatively strong, stocks jumped by 19 million bbl in the first week of January. That left stockpiles, excluding those in the Strategic Petroleum Reserve, at 439.6 million bbl – 1% above the five-year average, the Energy Information Administration (EIA) said Wednesday in its latest Weekly Petroleum Status Report.
In their December oil market report, OPEC researchers, citing China’s eased pandemic-era rules, forecast global crude demand would expand by 2.2 million b/d this year, following slightly stronger growth in 2022. However, given the Chinese government’s proven history of clamping down on economic activity during coronavirus outbreaks, the researchers conceded their outlook was peppered with skepticism. They also noted multiple pockets of geopolitical chaos, notably including the conflict in Ukraine, as well as the threat of recession in the United States, Europe and parts of Asia.
Tesla Plans $700 Million Expansion of New Texas Plant
The funds are earmarked for a “ground up and complete interior finish out of the EV manufacturing facility,” with construction starting later this month and ending early next year, according to filings dated Monday with the Texas Department of Licensing and Regulation. It’s unclear how much of that investment is included in the more than $1 billion Tesla has said it planned to spend on the plant.
The EV market leader started production at the factory last year and currently makes its battery-powered Model Y passenger vehicle at the plant. Tesla relocated its headquarters to Austin from Palo Alto, Calif., in late 2021.
Supply Chain Managers Uncertain About West Coast Ports
Nearly a third of logistics managers at major companies and trade groups say they do not know how much trade they would return to the West Coast once an International Longshore and Warehouse Union, or ILWU, labor deal is reached, according to CNBC’s supply chain survey. Eighteen percent of respondents said they would bring back 10% of their diverted trade, another 12% surveyed said they would bring back 20% of the trade they moved away, and another 12% were more bullish, saying they would bring back 60% of their diverted trade. Of those surveyed, 49% said they did not divert trade, compared to 40% who said they did.
Over half of those respondents told CNBC the main reason for moving trade away from the West Coast was the threat of an ILWU strike. About 40% cited both California’s AB5 “gig worker” law, which concerns the employment status of drivers, and rail delays. Respondents could list multiple reasons for the trade diversion.
Rare Comet Will Pass Earth For First Time In 50,000 Years: How To Watch And What It Means For The Past
A bright green comet—named C/2022 E3 (ZTF)—will pass by Earth for the first time in 50,000 years and will first pass by the Sun, arriving from the outer parts of the solar system, which is why it’s taken thousands of years to return. C/2022 E3 ZTF hasn’t made an appearance since the Upper Paleolithic period, which is the time Neanderthals and early Homo sapiens roamed the Earth, according to Space.
The comet will be the closest to Earth on February 1, and the closest to the Sun on January 12, and although its brightness is unpredictable, by then it will only be visible to the naked eye in dark skies, according to NASA. It’s northbound, heading toward the constellation Corona Borealis, so for those in the Northern Hemisphere, C/2022 E3 (ZTF) will be visible on January 12 between the stars Vega and Arcturus just before midnight with the help of telescopes and binoculars. For first-time comet gazers, experts recommend looking out on February 10 when the comet will be close to Mars, and for those who want to try and capture a photo, the easiest way would be to take long-exposure pictures of 20 to 30 seconds, likely revealing a fuzzy object with a tail, according to EarthSky.