Member Briefing July 20, 2022
Chipmakers Get Their $54 billion in CHIPS Act Government Subsidies—But it Comes With Strings Attached
The Senate backed by 64 to 34 a procedural measure setting the stage for potential votes to pass the legislation in the Senate and House of Representatives by the end of next week. The Bill authorizes about $54 billion in grants and loans for chip manufacturers, as well as a new, four-year 25% investment tax credit for chip making.
Semiconductor companies have been torn over how to perceive the bill, given that it disproportionately benefits semi manufacturers, like Intel over semi designers, such as NVIDIA and Advanced Micro Devices. Analyst estimate that the actual amount of funding available for chipmakers will dwindle down to about $38 billion from the headline figure of $52 billion when accounting for federal research programs and administrative overhead expenses.
War in Ukraine Headlines
- Ukraine and Russia: the Latest News – The Guardian
- Ukrainian Demands are Testing European Unity – Politico
- Olena Zelenska, Ukraine First Lady, on High-Profile US Trip – AP
- Russia Says Peace in Ukraine Will be on its Terms, Cultivates Iranian Support – Yahoo
- Ukraine Faces Difficulties Getting Western Weapons to Front Lines – WSJ
- Russia Seen Restarting Gas Exports from Nord Stream 1 on Schedule – Reuters
- Zelensky Widens Purge of Security Services – BBC
- EU Promises More Ukraine War Aid; Calls for Sanctions Unity – AP
- Germany Leaves Door Open for Extending Nuclear Power Use Amid Energy Crisis – Politico
- Blinken to Highlight Ukraine War in Push for Supply-Chain Cooperation – WSJ
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
BofA Survey: Fund Managers’ Pessimism About Global Growth Deepens
According to a survey from Bank of America of 293 fund managers who oversee a total of $800 billion in assets, expectations of global growth were at a net -79% in July, a new low in the history of the survey after reaching its previous all-time low of a net -73% in June.
When asked how they see the global economy trending over the next 12 months, 90% said they expect stagflation (below-trend growth and above-trend inflation), which was up from 83% in June and represented the highest percentage in the history of the survey.
White House Could Declare Climate Emergency as Soon as Wednesday
President Biden could declare a climate emergency as soon as Wednesday, two sources familiar with the plans told The Hill on Tuesday. One of the sources said that federal agencies are expecting an executive order declaring a climate emergency as soon as tomorrow, but it’s not entirely clear what it will entail.
The move comes as hopes for climate action on Capitol Hill have stalled, as swing vote Sen. Joe Manchin (D-W.Va.) backed away from talks last week following months of negotiations. The potential climate legislation, as part of Biden’s broader economic agenda, was expected to include major investments in clean energy.
U.S. COVID – The Booster Dilemma
According to US CDC estimates, BA.5 is now responsible for 78% of all new COVID-19 cases. Officials have stressed that booster doses provide additional protection against earlier Omicron subvariants and potentially later subvariants as well. However, current boosters have not yet been updated to more specifically target Omicron and its subvariants, leaving a dilemma for eligible individuals about whether to get a booster now or wait for updated versions.
Only 34% of the US population aged 5 years or older has received their first booster dose. Additionally, some experts wonder and worry whether BA.5 will even be the predominant variant in the fall, potentially making new boosters less effective than expected.
CDC Panel Gives Green Light to Novavax COVID-19 Vaccine
A Centers for Disease Control and Prevention (CDC) advisory committee on Tuesday unanimously voted to recommend the Novavax COVID-19 vaccine, giving a green light to a fourth shot to fight the virus. Following the panel’s 12-0 vote, CDC Director Rochelle Walensky will have the final step to sign off on the vaccine. The Biden administration previously announced it was purchasing 3.2 million doses of Novavax.
Novavax is intended for initial vaccine doses, not as a booster. Some hope that it could play a role persuading the vaccine-hesitant to get their shots as the Novavax vaccine uses a more traditional vaccine technology, compared to the mRNA technology used by Pfizer and Moderna. Therefore, it could influence those who had reservations about the Pfizer and Moderna products.
U.S. Housing Starts Drop to Lowest in Nine Months in June
Housing starts fell 2% to a seasonally adjusted annual rate of 1.559 million units last month, the lowest level since September 2021, the Commerce Department said on Tuesday. Data for May was revised higher to a rate of 1.591 million units from the previously reported 1.549 million units. Economists polled by Reuters had forecast starts would come in at a rate of 1.580 million units. Permits for future homebuilding fell 0.6% to a rate of 1.685 million units.
The housing market is very sensitive to interest rates, and, with the Federal Reserve lifting rates aggressively to blunt inflation running at its highest in four decades, the market has softened notably this year. The average contract rate on a 30-year fixed-rate mortgage climbed to nearly 6% in June, up from about 3.3% at the start of the year, which has put home purchases out of reach for a growing number of prospective buyers, particularly first-time purchasers.
Homebuilder Sentiment Plunges in July as Buyers Pull Back
The National Association of Home Builders/Wells Fargo Housing Market Index, a survey designed to gauge market conditions, found builder sentiment dropped 12 points to 55. That marked the largest single-month drop in the survey’s 37-year history with the exception of April 2020, when the reading plummeted 42 points to 30 after the start of the Covid-19 pandemic.
Any rating above 50 on the index is still considered positive, but sentiment has now fallen 24 points since March, when mortgage rates began moving higher. The average rate on the 30-year fixed mortgage has nearly doubled since January and is now hovering just below 6%.
‘Real’ Home Borrowing Costs Spike
A key but little noticed housing metric is what might be called “the real home borrowing cost.” That number encapsulates potential buyers’ expectations on whether, and by how much, future appreciation will either exceed or lag the current interest rate on 30-year mortgages.
The problem: This gift of high “negative” borrowing costs exists only in gangbusters markets. The bash ends when some combination of rising rates and perception that prices will flatten or decline reverses the trend so that your monthly nut gets costlier than your hoped-for windfall selling your home 7 or 8 years hence. That just happened in most US Markets.
Apple to Slow Hiring, Spending for Some Teams Next Year
Apple Inc plans to slow hiring and spending growth next year in some units to cope with a potential economic downturn, Bloomberg News reported on Monday, citing people with knowledge of the matter. The potential move would see Apple – the world’s most valuable company – join a growing pool of American corporations including Meta Platforms and Tesla Inc in slowing hiring.
Wheeler Takes Over as SUNY New Paltz President
Dr. Darrell Wheeler said he is “exhilarated and humbled” to start his new job as president of SUNY New Paltz. He took over on Monday from Dr. Donald Christian, who retired after serving the school for several years.
Wheeler most recently served as provost and senior vice president for Academic Affairs at Iona College. Prior to that, he served as dean of the School of Social Welfare and vice president for Public Engagement at the University of Albany, dean for the School of Social Work at Loyola University Chicago, and held academic positions at Hunter College, CUNY, Columbia University, and the University of North Carolina at Greensboro.
China Reports 691 New COVID Cases on July 16 vs 547 a Day Earlier
Mainland China reported 691 new COVID-19 cases on Saturday, of which 154 were symptomatic and 537 were asymptomatic, the National Health Commission said on Sunday. That compares with 547 new cases a day earlier – 129 symptomatic and 418 asymptomatic infections, which China counts separately.
The southwestern city of Chengdu, which reported 7 local cases on Sunday as of 4:00 p.m. (0800 GMT), closed some of the entertainment businesses such as bars and karaoke sites and rolled out capacity limits at restaurants, cinemas and gyms. A negative COVID test result within the 48 hours will also be required for people to leave the city from 6 p.m. on Monday, the local government said.
Hochul Spent $28 Million on Primary Win, Far Outspending Opponents
Governor Kathy Hochul has raised more than $38.8 million for her campaign — the vast majority of it in the 11 months since she became governor — and spent a whopping $26 million to win the June 28 Democratic primary, according to the latest campaign finance filings with the State Board of Elections.
Heading into the fall general election, Hochul and her running-mate, Lieutenant Governor Antonio Delgado, are facing Republican gubernatorial nominee Rep. Lee Zeldin of Long Island and lieutenant governor nominee Alison Esposito. Zeldin emerged victorious from a contentious four-way primary. Hochul and Delgado have a major fundraising advantage. Hochul has about $11.2 million in cash on hand and Delgado has about $1 million, per those latest filings, while Zeldin has $1.6 million and Esposito just over $2,000. For the primary, Zeldin was able to raise $12.4 million, and spent $10.5 million, per his filing.
Delta Orders 100 Boeing MAX Jets Worth $13.5 Billion
Delta agreed on Monday to buy 100 medium-haul Boeing MAX passenger aircraft worth a combined $13.5 billion, in a vote of confidence for the crisis-hit jet. The gigantic deal, announced by embattled U.S. plane maker Boeing on the first day of the Farnborough Airshow, includes options for 30 more of the planes.
The news comes as airlines across the world seek to replace their ageing fleets with fuel-efficient planes that emit less carbon dioxide. Delta said that the new 737-10 jets would curb fuel use and emissions by between 20-30% compared with the aircraft they are replacing. Shortly afterwards, Boeing announced that Japanese airline ANA has also agreed to purchase 20 of its smaller MAX 8 jets — an order worth $2.4 billion — plus two 777-8 freight planes.
Man It’s Hot – 10 Key Elements for a Workplace Heat Safety Program
Anyone, regardless of age or physical fitness, can experience heat illness. However, some people may have more difficultly shedding excess body heat and are at a higher risk, such as those who are older, overweight or obese, have diabetes, have heart disease and have hypertension or high blood pressure. The Centers for Disease Control and Prevention estimates that 48% of U.S. adults have hypertension and 40% are obese, making it likely that at least half of the workforce is at an increased risk for heat illness.
OSHA is focusing on heat safety in the workplace and will be conducting more worksite audits under its National Emphasis Program for Outdoor and Indoor Heat-Related Hazards. You need to make sure your workplace is prepared to keep employees safe while working in heat. Here are 10 key elements for a workplace heat safety program.