Member Briefing July 15, 2024

Date postedJuly 15, 2024
Posted By: Harold King Daily Briefing,

Top Story

The Latest on the Assassination Attempt of Former President Trump

Mixed Inflation News CPI = 3.0 - Cooler Than Expected. PPI = 2.6 – Hotter Than Expected

The consumer price index, a broad measure of costs for goods and services across the U.S. economy, declined 0.1% from May, putting the 12-month rate at 3%, around its lowest level in more than three years, the Labor Department reported Thursday. The all-items index rate fell from 3.3% in May, when it was flat on a monthly basis. Excluding volatile food and energy costs, so-called core CPI increased 0.1% monthly and 3.3% from a year ago, compared with respective forecasts for 0.2% and 3.4%, according to the report from the Bureau of Labor Statistics. The annual increase for the core rate was the smallest since April 2021. Read more at CNBC

Producer inflation in the US rose at a stronger pace than expected in June.  The Producer Price Index (PPI) for final demand in the US rose 2.6% on a yearly basis in June, the data published by the US Bureau of Labor Statistics showed on Friday. This reading followed the 2.2% increase recorded in May and came in above the market expectation of 2.3%. The annual core PPI rose 3% in the same period, coming in above April's increase and the market expectation of 2.3% and 2.5%, respectively. On a monthly basis, the PPI increased 0.2%, while the core PPI rose 0.4%. Read more at FX Street

See a detailed CPI Breakdown at Yahoo Finance


US Consumer Sentiment Ebbs in July; Jnflation Expectations Improve

U.S. consumer sentiment ebbed in July, but inflation expectations over the next year and beyond improved, a survey showed on Friday. The University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 66.0 this month, compared to a final reading of 68.2 in June. Economists polled by Reuters had forecast a preliminary reading of 68.5. "Nearly half of consumers still object to the impact of high prices, even as they expect inflation to continue moderating in the years ahead," said Surveys of Consumers Director Joanne Hsu.

"With the upcoming election, consumers perceived substantial uncertainty in the trajectory of the economy, though there is little evidence that the first presidential debate altered their economic views." The survey's reading of one-year inflation expectations dipped to 2.9% from 3.0% in June. Its five-year inflation outlook also fell to 2.9% from 3.0% in the prior month.

Read more at Reuters

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Policy and Politics

DiNapoli: Tax Cap Remains at 2% for 2025

Property tax levy growth will be capped at 2% for 2025 for local governments that operate on a calendar-based fiscal year, according to data released today by State Comptroller Thomas P. DiNapoli. This figure affects tax cap calculations for all counties, towns, and fire districts, as well as 44 cities and 13 villages. In accordance with state law, DiNapoli’s office calculated the 2025 inflation factor at 3.30% for those local governments with a calendar fiscal year, above the 2% allowable levy increase, and indicative of the higher costs facing these localities.

The tax cap, which first applied to local governments (excluding New York City) and school districts in 2012, limits annual tax levy increases to the lesser of the rate of inflation or 2% with certain exceptions. The law also includes a provision that allows municipalities to override the cap.

Read more at The Comptroller’s Website

Social Security COLA Increase for 2025 Projected to be Lowest in Several Years

The Senior Citizen’s League (TSCL), a nonpartisan senior advocacy group, released its latest estimate on Thursday. Based on figures from the Labor Bureau’s most recent Consumer Price Index for Urban Wage Earners (CPI-W), next year’s cost-of-living adjustment (COLA) is projected to be only 2.63%. If that estimate holds true through October — when the COLA is officially announced — it would be the lowest increase since 2021’s 1.3% adjustment.

The price of groceries, especially, were a focus of TSCL’s latest release. Using data from the Bureau of Labor Statistics, the organization estimated the cost of the “average grocery item” to have inflated by 24% since 2020. Still, TSCL’s most recent COLA estimate is slightly higher than the group’s June estimate, when they predicted a 2.57% increase for 2025. But it’s still below the 3.2% increase afforded to Social Security recipients in 2024, and nowhere near the 8.7% and 5.9% increases for 2023 and 2022’s recipients, respectively.

Read more at The Hill

FTC Will Sue Pharmacy Middlemen Over Inflated Insulin Prices, Report Says

The Federal Trade Commission will sue three of the largest pharmacy benefit managers after the agency released a report alleging the companies—which manage roughly 80% of prescriptions in the U.S.—were driving up the prices of some medications, like insulin, while pushing customers away from cheaper alternatives. The FTC’s lawsuit will challenge the business practices of UnitedHealth Group’s OptumRx, Cigna Group’s Express Scripts and CVS Health’s Caremark, three of the largest firms responsible for negotiating the terms and conditions for access to prescription drugs.

The agency released findings from an investigation Tuesday alleging pharmacy benefit managers use various tactics to have customers choose certain drugs over others, including ranking them on lists or formularies, a list of medications provided by health insurance providers. Some pharmacy benefit managers excluded cheaper medications on formularies in exchange for larger rebates from drugmakers, the FTC’s report alleges. Neither Caremark, Express Scripts nor OptumRx immediately responded to requests for comment from Forbes.  J.C. Scott, president and chief executive of the Pharmaceutical Care Management Association, which represents pharmacy benefit managers, criticized the report Tuesday: “This report is based on anecdotes and comments from anonymous sources and self-interested parties, and supported only by two cherry-picked case studies that are implied to be representative of the entire market.”

Read more at Forbes

Health and Wellness

Map Shows States Where COVID Levels are "High" or "Very High" as Summer Wave Spreads

More than half of states are now seeing "high" or "very high" levels of SARS-CoV-2, the virus that causes COVID-19, in their wastewater testing, according to figures published Friday by the Centers for Disease Control and Prevention, as this summer's COVID wave reaches a growing share of the country. Nationwide, the CDC now says that the overall level of SARS-CoV-2 in wastewater is "high" for the first time since this past winter. Levels remain "high" across western states, where trends first began to worsen last month, while other regions are now seeing steeper increases at or near "high" levels.

Friday's update is the first since last month, due to the Fourth of July holiday. The uptick is in line with a growing number of COVID-19 patients showing up in emergency rooms. The District of Columbia and 26 states are now seeing "substantial increases" in COVID-19 emergency room visits, the agency says. Nationwide, the average share of emergency room patients with COVID-19 is also now the highest it has been since February and has increased 115% from a month ago. Overall emergency room visits and hospitalization trends remain at what the CDC deems to be "low" levels in several states, far below the deadly peaks reached at earlier points during the pandemic.

Read more at CBS News

NYS COVID Update

The Governor updated COVID data for the week ending July 12th.

Deaths:

  • Weekly: 14
  • Total Reported to CDC: 83,505

Hospitalizations:

  • Average Daily Patients in Hospital statewide: 994
  • Patients in ICU Beds: 83

7 Day Average Cases per 100K population

  • 8.1 positive cases per 100,00 population, Statewide
  • 8.6 positive cases per 100,00 population, Mid-Hudson

Useful Websites:


Election 2024

 


Industry News

China Reaches Record Trade Surplus, Raising Alarm Abroad

China’s imports fell in June, missing expectations for slight growth, while exports rose more than expected, customs data released Friday showed. China’s imports fell by 2.3% in June from a year ago in U.S. dollar terms. That contrasts with a forecast of 2.8% growth, according to a Reuters poll. U.S. dollar-denominated exports for June climbed by 8.6% year on year, beating expectations for 8% growth forecast by a Reuters poll. Those figures lifted year-to-date imports by 2%, and exports by 3.6% in the first six months compared with the same period a year earlier.

EU’s trade with China fell in the first six months of 2024, with imports and exports both declining.

China’s trade with the U.S. was down slightly in dollar terms during the first half of the year, as imports from the U.S. fell 4.9%, though exports rose 1.5%.

Trade with Brazil grew rapidly in the first six months, with Chinese exports to the Latin American country surging by 24.4% and imports climbing by 8.3% year on year.

China’s imports of rare earths, meat, cosmetics products and machine tools fell sharply in the first half of the year, customs data showed. However, imports of iron ore and oil grew during that time.

China’s exports of cars rose by 18% in volume last month from the year-ago period, customs data showed.

Read more at CNBC

Machine Tool Orders Tick Higher, Bucking Recent Trend

U.S. machine shops and other manufacturers increased their demand for capital equipment during May, with new metal-cutting and metal-forming and fabricating machines rising 21.8% from April to $386.7 million for the month. That represents a 6.5% increase in new orders from May 2023, but it brings the 2024 year-to-date new-order volume to $1.813 billion, which is -12.2% less than the January-May 2023 new-order volume.

AMT reported that contract machine shops (or “job shops”) increased their order volumes during May. Although those shops are the largest segment of the market for new manufacturing technology orders, they have consistently trailed the overall market during the first five months of 2024. Demand for manufacturing technology among OEM is notably strong among electrical equipment manufacturers and power-generation and transmission equipment manufacturers. Regional demand for manufacturing technology was generally strong during May, particularly in the Northeast where orders for metal-cutting machinery rose 73.3% from April to $77.08 million, which is up 17.4% year-over-year,

Read more at American Machinist

Reshoring Creating Record Amount of Jobs

The Reshoring and FDI trends continue to grow, driven by increasing global risks. Supply chains today face numerous disruptions, from political tensions and regional conflicts to climate change and extreme weather events. This is according to the Reshoring Initiative which announced on July 9 that in 2023 job announcements due to reshoring and FDI reached 287,000, the second highest year on record. These factors, combined with economic uncertainties, underscore the need for resilient and adaptable supply chain strategies to navigate an increasingly unpredictable global landscape. Investment in U.S. manufacturing has also been rising, with a key focus on shortening supply chains

Significant growth has been noted in “essential” industries supported by the Inflation Reduction Act (IRA) and other government subsidies, particularly in EV batteries, semiconductor chips, and solar energy. These products drove about 39% of the announced jobs in 2023. As government subsidies run out, new reshoring and FDI announcements are slowing. The Congressional Budget Office just upped the budget deficit estimate for 2024 25% to $2 trillion and annually thru 2034 to 5.5% of GDP. Future progress will depend on new policies that make U.S. manufacturing cost competitive, rather than subsidize specific industries.

Read more at Material Handling & Logistics

Unilever to Cut One-Third of European Office Jobs by 2025

Unilever plans to cut a third of its office-based roles in Europe by the end of 2025, the toiletries giant has said. It comes after it announced in March that it would be cutting costs, affecting about 7,500 roles globally. The firm said it would begin a consultation process with those affected by cuts in Europe, with about 3,200 jobs being axed in the region. "We recognise the significant anxiety that these proposals are causing amongst our people," it said in a statement.

The changes are part of efforts to revive growth at the firm under boss Hein Schumacher who took over as chief executive last year, after underperformance in recent years. “These measures mean the biggest job cuts in Unilever for decades," Hermann Soggeberg, the head of Unilever’s European Works Council, said in a letter to staff. A Unilever spokesperson said: “In March, we announced the launch of a comprehensive productivity programme, to drive focus and growth through a leaner and more accountable organisation." Those plans also included the decision to split off its ice cream business, which includes the Wall's, Ben & Jerry's and Magnum brands. Unilever said the shake-up would help it to "do fewer things better".

Read more at The BBC

Countdown to Bear Mountain Bridge Centennial has Begun

The Bear Mountain Bridge will turn 100 years old later this year and the celebration of the iconic landmark has begun. Activities between now and November include an online pop-up shop, guided hiking tours, an art workshop, an international engineering conference, and a dedication ceremony. The Bear Mountain Bridge is the Hudson River’s first vehicular crossing south of Albany. “The Bear Mountain Bridge is truly an icon of the Hudson Valley and New York State,” Governor Kathy Hochul said. “The bridge was a remarkable engineering achievement in 1924 and has been a mainstay of our transportation network ever since.”

The Bear Mountain Bridge was dedicated on November 26, 1924, and opened to the general public a day later on Thanksgiving Day, November 27, 1924. The bridge was originally built by a private enterprise, the Bear Mountain Hudson River Bridge Company. In September 1940, the New York State Bridge Authority (NYSBA) acquired the bridge, making it NYSBA’s southernmost bridge.

Read more at Mid-Hudson News

Bank Earnings: JPMorgan, Wells Fargo, Citigroup all Increase Provisions for Credit Losses

Dow Jones giant JPMorgan Chase (JPM) topped earnings and revenue views early Friday as big banks kicked off the Q2 earnings season. Wells Fargo (WFC) fell after net interest income outlook missed views.  Citigroup (C) rose on its quarterly beat.

JPMorgan (JPM) reported a 29% earnings increase to $6.12 per share, compared to FactSet expectations of $5.88 per share. Excluding certain items, adjusted earnings were $4.40 per share for the quarter. Revenue jumped 20% to $50.2 billion, well ahead of views of a 2.2% increase. Net interest income rose 4%, but fell short of the 6.5% growth expected by analysts. JPMorgan increased its provision for credit losses to $3.05 billion, from $1.88 billion in Q1 and the $2.89 billion the bank set aside last year. The bank guided 2024 net interest income around $91 billion.

Wells Fargo earnings rose 6.4% to $1.33 per share, ahead of views of a 3.2% increase. Total revenue ticked up slightly to $20.69 billion, while FactSet expected a 1.2% decline. The bank's net interest income declined 9% for the quarter, slightly worse than the 7.9% decrease that analysts predicted. Wells sets aside $1.24 billion in provisions for credit losses, compared to $938 million last quarter and $1.71 billion for the same period last year. The bank expects 2024 net interest income declines 7% to 9%, but will likely be in the upper half of that range.

Citigroup reported a 14.3% increase in earnings to $1.52 per share, outpacing the 4.5% growth expected by analysts. Total revenue rose 4% to $20.14 billion to beat estimates for a 3.3% increase. Net interest income was $13.49 billion for the quarter, essentially flat from Q1 but down from $13.9 billion last year. Citi allocated $2.48 billion in provisions for credit losses, increasing from $2.37 billion last quarter and $1.82 billion last year, respectively. Citi guided full-year revenues between $80 billion and $81 billion, which was in-line with FactSet views of $80.66 billion. The bank expects net interest income excluding markets to decline modestly year-over-year.

Read more at Investor’s Business Daily

DOE Issues $2B for New EV Plant Conversions

General Motors’s Lansing, Mich., Grand River Assembly plant is one of 11 manufacturing locations selected to share a total of $2 billion in Dept. of Energy funds for retooling, retrofitting, and retraining in support of electric vehicle manufacturing projects. The automaker did not detail any plans for adding EV production at Lansing, but explained that it will continue to produce the Cadillac CT4 and CT5 sedans, and information about future product lines will be provided “down the road.”

Other manufacturers selected for the DOE’s Domestic Manufacturing Auto Conversion Grants program include American Autoparts Inc., Blue Bird Body Co., Fiat-Chrysler Automotive, Harley Davidson inc., Volvo Technology of America, and ZF North America. The operations receiving the funds are in Georgia, Indiana (2 plants), Illinois, Maryland, Michigan (2), Pennsylvania (2), and Virginia. According to the Dept. of Energy, the selection for award negotiations is not a commitment of funding. The applicants will undergo a negotiation process, and DOE may cancel the negotiations and rescind the selection for any reason. The Domestic Manufacturing Auto Conversion Grants program is structured to support job creation and retention, and the selected businesses must demonstrate they are supporting unionized workers. The Department noted that the funds it is assigning will support production of parts for electric motorcycles and school buses, hybrid powertrains, heavy-duty commercial truck batteries, and electric SUVs

Read more at American Machinist

The Bottom Line: The CEO’s Summer Reading List

“He inspired neither love nor fear, nor even respect…He originated nothing, he could keep the routine going—that’s all.” As a description of your typical middle manager, it is hard to surpass Marlow’s view of the boss at a river port in Joseph Conrad’s “Heart of Darkness”. The novella is a critique of colonialism in Africa, and an exploration of power and morality. It is also a guide to dealing with corporate bureaucracy. Marlow’s steamboat is in tatters and the manager is useless—Marlow must solve the problem himself. It sounds like an ordinary day at a Fortune 500 company.

Bookshops are stuffed with management tomes on how to be a good leader, inspire others, survive office politics, navigate cultural differences and win negotiations. But executives would do well to ignore the corporate self-help shelves and head instead for the classics section. Great works of literature, with their piercing examination of the human condition, have much to teach the aspiring chief executive about business—values of honesty, empathy and commercial acumen, as well as insights into vanity, pettiness, greed and ruthless ambition, all of which punctuate the journey from cubicle to corner office. Ditching corporate prose for fabulous stories is itself the subject of at least one business book. In “Questions of Character: Illuminating the Heart of Leadership Through Literature”, Joseph Badaracco, a professor of business ethics at Harvard Business School, considers eight works that provide lessons on what good leadership is—and isn’t. If Mr Badaracco had to recommend one book executives should read this summer, it would be “Things Fall Apart” by Chinua Achebe.

 Read more at the Economist (Subscription)

 

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