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Member Briefing January 16, 2025

Date postedJanuary 16, 2025
Posted By: Harold King Daily Briefing,

Top Story

Empire State Manufacturing Survey: A Decline In Activity, Optimism High

After holding steady last month, manufacturing activity declined in New York State, according to the January survey.

  • The general business conditions index fell fifteen points to -12.6.
  • The new orders index fell thirteen points to -8.6, pointing to a modest decline in orders, and the shipments index retreated eleven points to -1.7, indicating that shipments were little changed.
  • The inventories index remained positive at 5.8, a signal that inventories grew.
  • The delivery times index came in at 3.5, suggesting that delivery times were slightly longer, and the supply availability was zero, a sign that supply availability was unchanged.
  • The prices paid index increased eight points to 29.1, and the prices received index rose five points to 9.3.
  • The index for number of employees rose eight points, but held near zero at 1.2, suggesting that employment levels were steady.
  • The average workweek index remained negative at -15.1, pointing to a significant decline in hours worked.

Firms grew more optimistic that conditions would continue to improve in the months ahead. The index for future business activity climbed ten points to 36.7, with fifty-three percent of respondents expecting conditions to improve over the next six months. Employment is expected to grow and supply availability is expected to be steady. Capital spending plans remained modest.

Read more at The NY Fed

CPI = 2.9 – Inflation Ticks Higher, But Lower than Forecast

Headline inflation was 2.9% in December, according to year-over-year changes in the Bureau of Labor Statistics’ consumer price index, the most commonly cited measure of inflation, while the index rose 0.4% from November to December on a seasonally adjusted basis. Consensus economist forecasts called for 2.9% annual inflation and 0.3% month-over-month inflation, according to Dow Jones data. That’s the highest annual inflation reading since July’s 2.9%.

Core inflation, which excludes the more erratic food and energy categories, was 3.2% last month, actually better than estimates of 3.3%, where it stood from September to November, though it’s still well above the 2% long-term target held by the Federal Reserve. The more encouraging core inflation reading was largely because last month’s higher prices were mostly concentrated in energy, as average gasoline prices rose 4.4% month-over-month. The overall CPI is up 21.3% from December 2020 – to December 2021

Read more at Wells Fargo

Even Harvard M.B.A.s Are Struggling to Land Jobs

Harvard Business School says its M.B.A.s can’t solely rely on the university’s name to open doors anymore. Twenty-three percent of job-seeking Harvard M.B.A.s who graduated last spring were still looking for work three months after leaving campus. That share is up from 20% the prior year, during a cooling white-collar labor market; the figure was 10% in 2022, according to the school.

Harvard isn’t the only elite business school where recent grads seem to be stumbling on their way into the job market. More than a dozen top-tier M.B.A. programs, including those at the University of Pennsylvania’s Wharton School, Stanford’s Graduate School of Business and New York University’s Stern School of Business, had worse job-placement outcomes last year than any other in recent memory. Most M.B.A.s from top schools end up with good-paying jobs, and school officials say they have an edge in the white-collar job market. But the three-month figure is closely watched because it signals hiring demand for corporate climbers in high-wage fields and it usually gives schools a statistic to woo young professionals into investing in a management degree.

Read more at The WSJ

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Policy and Politics

Hochul Touts Free Community College, Is Silent On Foundation Aid In State of the State

Education is one of the biggest individual chunks of the New York state budget, and Gov. Kathy Hochul unveiled several proposals in her State of the State address intended to make education more affordable for New Yorkers. She isn’t expected to detail how exactly the state will pay for them until next week.  What stuck out immediately was a lack of any mention of tweaks to the Foundation Aid formula, which along with other forms of school aid will support education spending. Details of what the governor plans to do with the Rockefeller Institute’s Foundation Aid report weren’t necessarily expected in the State of the State address itself given that school aid is typically considered fairly in the weeds.

“We’re going to make community college completely free for students age 25 to 55,” Hochul told the crowd gathered at The Egg in Albany. The proposal for free community college is intended to benefit both adults looking for a new career path and the economy, as it is focused specifically on in-demand occupations. “We’re talking about people 25-55 who want to complete a degree and want to move into a new field in the economy. It's an opportunity for them to earn more by getting a degree that unlocks a great job,” SUNY Chancellor John King said.

Read More at NY State of Politics

House Republicans Eye Reconciliation Bill For Oil And Gas Leasing Mandates, Approving Mining Projects

House Republicans are eying a process called reconciliation to boost oil and gas drilling, and approve specific mining projects, which would only require a simple majority for passage. House Natural Resources Chairman Bruce Westerman (R-Ark.) told reporters on Wednesday “there are a lot of very specific things we could look at possibly for reconciliation.” In addition, Westerman said that Republicans could try to require more auctions for the rights to drill oil and gas, saying they could “mandate more sales in the Gulf of Mexico” as well as in Alaska’s North Slope and Bering Sea.

Many of his suggestions would be explicit reversals of Biden policies. The Biden administration put forward a five-year offshore drilling plan, which has the smallest-ever number of oil and gas leases sales offshore. Westerman on Wednesday called the plan a “joke.” Biden also barred drilling in part of the Bering Sea last week. His administration canceled leases for the Twin Metals mine and also rejected the Ambler Road project, which would have built a road that enabled mining in an area with significant copper and cobalt deposits.

Read more at The Hill

State of the State: The Empire Center’s Take

In response to Governor Hochul’s State of the State address and policy book, Empire Center experts issued the following reactions:

“There was a big mismatch between Governor Hochul’s emphasis on affordability and the substance of the speech. State government can improve affordability by making it less costly to provide goods and services and by fostering a better business climate. But the governor didn’t lay out a plan for either. It took New York almost four years to recover its job losses from COVID, and Albany’s self-inflicted obstacles were to blame. The redistribution strategy laid out by Governor Hochul today is a plan to make elected officials feel better about the problems they’re still refusing to confront.” – Ken Girardin, Research Director

Read more at The Empire Center

Transition 2024


Health and Wellness

FDA Bans Artificial Dye Red 3 From Food

The Food and Drug Administration is banning the use of Red No. 3, an artificial dye linked to cancer in animals, from food and ingested drugs. The move will impact thousands of food products on the market in the U.S., including Betty Crocker’s loaded mashed potatoes and MorningStar Farms plant-based bacon strips. It is even in products that aren’t red, such as Brach’s candy corn. The ban follows growing scrutiny on artificial colors and other food additives and ingredients. It comes after the FDA recently updated its definition of “healthy” as a marketing claim on food and this week proposed rules that would require nutrition information on the front of food packaging.

Food manufacturers will have until early 2027 to reformulate products that use Red 3. Consumer advocates pushed the agency to revoke authorization for the additive after two studies linked it to cancer in male laboratory rats.

Read more at The WSJ

Industry News

U.S. 30-Year Mortgage Rate Tops 7%, Highest Since May 2024

The interest rate for the most popular U.S. home loan rose last week to an eight-month high of 7.09%, extending an upward trend that's squeezing would-be homebuyers already facing rising house prices and limited supply. The average contract rate on a 30-year fixed-rate mortgage rose 10 basis points in the week ended Jan. 10, the Mortgage Bankers Association said on Wednesday.

It was the fifth straight weekly rise and puts the main home-loan rate nearly a full percentage point above where it was in September, when the Federal Reserve began cutting short-term borrowing costs. The Fed's policy rate is now a full percentage point lower than it was then, but mortgage rates have gone in the opposite direction, tracking a surge in Treasury yields driven by worries about sticky inflation and rising budget deficits.

Read more at Reuters

Big Bank Earnings Show Solid Growth

JPMorgan Chase on Wednesday topped estimates for fourth-quarter revenue and profit, helped by better-than-expected net interest income and fixed income trading and investment banking results. Here’s what the company reported: Earnings: $4.81 a share vs. $4.11 LSEG estimate. Revenue: $43.74 billion vs. $41.73 billion expected The bank said profit rose 50% to $14 billion in the quarter as noninterest expenses fell 7% from a year earlier, when the firm had a $2.9 billion FDIC assessment tied to regional bank failures. Revenue climbed 10% to $43.74 billion, helped by Wall Street operations and better-than-expected net interest income of $23.47 billion. CNBC

Wells Fargo posted better-than-expected earnings and issued strong guidance on net interest income for 2025. Here’s what the bank reported for the fourth quarter compared with what Wall Street was expecting: Adjusted earnings per share: $1.42 vs. $1.35 expected. Revenue: $20.38 billion versus $20.59 billion expected. Net income of $5.1 billion, or $1.43 per diluted common share, came in 47% higher than the figure from the fourth quarter in the year prior. The lender said it expects 2025 net interest income, a key measure of what a bank makes on loans, to be 1% to 3% higher than 2024′s number of $47.7 billion. CNBC

Goldman Sachs posted fourth-quarter results that topped estimates on stronger than expected trading revenue. Here’s what the company reported: Earnings: $11.95 a share vs. $8.22 LSEG estimate. Revenue: $13.87 billion vs. $12.39 billion expected. The bank said profit roughly doubled from a year earlier to $4.11 billion, or $11.95 a share, as revenues grew while expenses shrank. Revenue jumped 23% to $13.87 billion, helped by higher equities and fixed income trading revenue, and rising investment banking results. Equities trading generated $3.45 billion in revenue. Fixed income trading made $2.74 billion in revenue, topping the estimate by almost $300 million. Investment banking fees of $2.05 billion essentially matched the estimate. CNBC

Citigroup reported its fourth-quarter earnings Wednesday morning, beating estimates on the top and bottom lines. Here is how the company did relative to LSEG analyst consensus estimates: Earnings: $1.34 a share, vs $1.22 expected. Revenue: $19.58 billion, vs $19.49 billion expected. Citi’s net income was $2.86 billion from the quarter, an improvement from a net loss of $1.84 billion a year ago. The bank reported growth across several different business units during the fourth quarter. Investment banking in particular was a bright spot, with revenue jumping 35% year over year. As a result, total banking revenue grew 12%, which expanded to 27% when including the impact of loan hedges. CNBC

Germany Economy Shrinks in 2024 For A Second Year In A Row, Mfg Shrinks by 3%

Germany's economy contracted by 0.2% last year after shrinking by 0.3% in 2023, latest data showed. According to first calculations of the Federal Statistical Office (Destatis), the price adjusted gross domestic product (GDP) was 0.2% lower in 2024 than in the previous year. The decline in economic performance in Germany also amounted to 0.2% after adjustment for calendar effects, a Destatis press release said. After adjustment for price effects, whole economy gross value added fell by 0.4% in 2024, with significant differences in the performance of individual economic sectors.

In manufacturing, output was down and gross value added dropped significantly (-3.0%) compared with the previous year. In particular, key sectors like the manufacture of machinery and equipment or the automotive industry saw a marked decline in production. Production remained at a low level in energy-intensive industrial branches, which include the chemical and metal-working industries for example. In 2023, production had decreased considerably owing to the sharp rise in energy prices.

Learn more at EuroNews

Global Electric Vehicle Sales Up 25% In Record 2024

Global sales of fully electric and plug-in hybrid vehicles rose by a quarter last year to over 17 million cars, helped by a fourth consecutive month of record sales in December as China continued to grow and Europe stabilised, data showed on Tuesday. Incentives and emission targets pushed EV sales in China and aided Britain in overtaking Germany as Europe's biggest battery-electric market in 2024, research firm Rho Motion said.

Global sales of fully electric vehicles and plug-in hybrids rose 25.6% year-on-year to 1.9 million in December, albeit slowing for a second consecutive month, the Rho Motion data showed. Sales in China jumped 36.5% to 1.3 million vehicles in December, and totalled 11 million for the whole of 2024. In the United States and Canada, EV sales rose 8.8% to 0.19 million in December, while Europe reported sales of 0.31 million, up 0.7% from the same month of 2023. In the rest of the world, December sales rose by 26.4%.

Read more at Reuters

Cyber Threats, Government Policies Top Supply Chain Concerns for Businesses

Companies expect less risk to their supply chains at the beginning of 2025 when compared to Q4 2024, but not by much. The Lehigh Business Supply Chain Risk Management Index (LRMI) collects survey data each quarter to gauge whether businesses expect supply chain risks to increase (≥ 51), remain the same (50) or decrease (≤ 49) for 10 categories in the upcoming quarter. The average across the categories dropped from 67.48 in Q4 to 66.18 for Q1.

Companies say data and security breaches are the biggest threat they expect to affect their supply chains at the beginning of 2025, with one respondent noting that a cyber/data incident is not a matter of “if” but “when” for most businesses. Cybersecurity and Data Risk topped the list with an index of 76.97. With a reading of 74.16, changing government policies is also a primary concern surrounding supply chains. However, much like cybersecurity risks, the Q1 index for Government Intervention Risk is lower than what was reported in the second half of 2024. Interestingly, survey comments cite the incoming administration and its tariff proposals as a reason for optimism and pessimism.

Read More at Industry Week

US Army Awards Airbus $315M Contract for UH-72 Lakota Support

Airbus has secured a $315-million contract modification to provide logistics support and engineering services for the US Army’s UH-72 Lakota helicopters. The project will take place in Grand Prairie, Texas, and is expected to be completed by the end of this year, according to the US Department of Defense. Lakota’s mission capabilities include reconnaissance, counter-drug operations, and disaster response. Additionally, the helicopters support training efforts of the Army National Guard at Fort Novosel in Alabama and other US training facilities across 49 states and territories.

The latest deal builds on several earlier contracts aimed at modernizing the US Army’s UH-72 Lakota fleet. In 2023, Airbus signed a $27.8 million contract to upgrade 50 UH-72A helicopters with new digital interfaces, mission management systems, and monitors. In 2022, Safran Helicopter Engines and Airbus renewed an agreement to provide maintenance, repair, and overhaul services for 900 Arriel 1E2 and Arriel 2E engines powering the UH-72A and UH-72B helicopters.

Read More at Defense Post

Watch As SpaceX Rocket Blasts Off To The Moon

A SpaceX rocket has blasted off from Florida carrying two privately constructed lunar landers and a micro rover to the Moon. The uncrewed Falcon 9 launched from the Kennedy Space Center on Wednesday. Later on Wednesday, SpaceX was expected to carry out the seventh flight test of Starship rocket. It completed a world first last year after part of it was captured on its return to the launch pad.

This comes days after the launch of Jeff Bezos' Blue Origin rocket was postponed due to a "vehicle subsystem issue".

Read more at BBC

Oscar Contender ‘Sing Sing’ Will Hit Theaters — And Prisons — This Week

The Golden Globe-nominated prison drama “Sing Sing” will be re-released in theaters and made available in more than 1,100 correctional facilities this week in what its distributor says is the first time a major theatrical release is made available to incarcerated people. The “Sing Sing” prison screenings will reach nearly one million incarcerated people, according to a press release from film distributor A24.

The film is inspired by a true story and is based on real prisoners who were incarcerated at Sing Sing Correctional Facility in Ossining New York, some of whom play fictionalized versions of themselves. The men, both the characters in the film and their real-life counterparts, co-founded and put on stage productions as part of the Rehabilitation Through the Arts theater program while incarcerated. The film stars Colman Domingo, an actor known for his Emmy-winning role in “Euphoria” and Oscar-nominated performance in “Rustin” (2023), as John “Divine G” Whitfield, a real prisoner from Sing Sing who was incarcerated for more than 20 years.

Read more at The WSJ

 

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