Member Briefing July 24, 2024
Top Story
Existing-Home Sales Slipped 5.4% in June; Median Sales Price Jumps to Record High of $426,900
Existing-home sales fell in June as the median sales price climbed to the highest price ever recorded for the second consecutive month, according to the National Association of Realtors. All four major U.S. regions posted sales declines. Year-over-year, sales waned in the Northeast, Midwest and South but were unchanged in the West. Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – receded 5.4% from May to a seasonally adjusted annual rate of 3.89 million in June. Year-over-year, sales also dropped 5.4% (down from 4.11 million in June 2023)
“We’re seeing a slow shift from a seller’s market to a buyer’s market,” said NAR Chief Economist Lawrence Yun. “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.” The median existing-home price for all housing types in June was $426,900, an all-time high and an increase of 4.1% from one year ago ($410,100). “Even as the median home price reached a new record high, further large accelerations are unlikely,” Yun added. “Supply and demand dynamics are nearing a balanced market condition. The month supply of inventory reached its highest level in more than four years.”
Peak Shipping Season Arriving Earlier As Importers Try to Avoid Delays
Trade figures show inbound shipping volumes have been surging into American ports since late spring, as retailers try to get ahead of delays and disruptions swirling around ocean transport operations. Companies are moving quickly to pull forward overseas orders, putting into play lessons learned during the turmoil that hit supply chains during the pandemic.
It also marks a big bet for importers who risk being stuck with excess inventories if consumers don’t pick up their spending, potentially repeating the overstocking that troubled retailers two years ago. The pull-forward is being driven largely by the turmoil in the Red Sea, where attacks by Houthi rebels on commercial shipping have forced ocean carriers to divert vessels, effectively eating up capacity and driving up rates—and shippers’ risks.
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- Palestinian Factions Agree To Form Unity Government - Reuters
- Netanyahu Faces Delicate Balancing Act In US After Biden Exits Race - BBC
- Harris Won’t Preside Over Netanyahu’s Speech To Congress – Washington Post
- WHO 'Extremely Worried' About Possible Gaza Polio Outbreak - BBC
- Houthi threat to Red Sea shipping is growing, says UN envoy to Yemen - Yahoo
- Israel Orders Evacuation Of Part Of Gaza Humanitarian Zone As War’s Toll Passes 39,000 Palestinians - AP
- 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
- Russian Troops Mount Pressure On Ukrainian Logistics Hub Of Pokrovsk - Yahoo
- Ukrainian Drone Attack Set Russia’s Tuapse Refinery on Fire - Bloomberg
- Putin Needs '5 Years' To Refill Russian Army As Casualties Reach 550K: UK - Newsweek
- EU Drops Hungary Meeting Over Ukraine War Stance - Reuters
- Russia Sentences Radio Free Europe Journalist Alsu Kurmasheva After Secret Trial - WSJ
- Ukraine Shoots Down Second Russian Su-25 Combat Jet in 5 Days: Kyiv - Newsweek
- 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
- China To Allow Delayed Retirement To Combat Population Woes - Reuters
- Venezuelan Opposition Voters Band To Safeguard Election, Warning Of The Ruling Party’s Tricks - AP
- South Korea Could Lead the Way in a Successful Nuclear Renaissance – Oil Price
- Is Vietnam Losing Its Appeal For China’s Manufacturers Bypassing US Tariffs? - SCMP
- Russia and North Korea Sign New Agreement - Newsweek
- Everything To Know About The Olympics Opening Ceremony - Forbes
- Modi Government Focuses On Job Creation In Post-Election Budget – Nikkei Asia
- UK to 'Double Fighting Power in Three Years,' Top British General Says - Newsweek
Policy and Politics
Secret Service Director Cheatle Resigns After Trump Assassination Attempt
Secret Service Director Kimberly Cheatle resigned on Tuesday following a disastrous appearance before Congress to review the assassination attempt against former President Trump. Cheatle has faced calls to resign since the July 13 rally in Butler, Pa., during which a gunman managed to fire shots at Trump, piercing his ear. But those calls grew louder during a hearing before the Oversight Committee in which Cheatle infuriated lawmakers on both sides by sidestepping multiple questions and failing to provide sought-after details about how the agency was reckoning with its failure to secure Trump’s safety.
“I take full responsibility for the security lapse,” she said in the email to staff Tuesday that was obtained by The Associated Press. “In light of recent events, it is with a heavy heart that I have made the difficult decision to step down as your director.”
Senate Appropriators Say Spending Bill Includes NASA Increase
The leaders of a Senate appropriations subcommittee say they will increase NASA’s budget and protect the Artemis lunar exploration campaign in an upcoming spending bill even as another senator criticized a “wrongheaded” process. The Senate Appropriations Committee is scheduled to mark up a commerce, justice and science (CJS) spending bill for fiscal year 2025 on July 25. It is one of four bills the committee will consider that day after skipping a traditional subcommittee markup.
“We have increased funding for NASA,” said Sen. Jeanne Shaheen (D-N.H.), chair of the CJS appropriations subcommittee, but did not discuss specifics about the bill, which the committee has yet to release. NASA requested nearly $25.4 billion for fiscal year 2025 after receiving $24.875 billion in 2024. She did not discuss any specific programs, but Sen. Jerry Moran (R-Kan.), ranking member of the CJS subcommittee and the other co-chair of the delegation, mentioned Artemis. “I would emphasize that in last year’s appropriations bill and in this year’s appropriations bill, it’s been a goal of mine and others to make sure that Artemis is protected and that our plans to be on the moon are advanced,” he said.
Biden to Deliver Oval Office Speech on 2024 Decision Tonight
President Joe Biden will deliver a speech on his decision to drop out of the 2024 race on Wednesday, sources familiar confirm. Biden announced his decision not to seek reelection in a letter posted to X on Sunday, after which he endorsed Vice President Kamala Harris to replace him on the ticket. Harris secured the support of enough Democratic delegates to win the party’s nomination for president Monday evening, according to CNN’s delegate estimate.
Biden is scheduled to depart Rehoboth Beach, Delaware, where he was self-isolating last week to recover from Covid, and return to the White House on Tuesday afternoon. Biden and his close aides had already begun working on the speech Monday, two people familiar with the matter said. They continued drafting the address while the president was in Rehoboth with the expectation that this will be his first major event after he returns to Washington.
Health and Wellness
GLP-1s Are Growing In Popularity As Weight Loss Drugs But Losing Steam Among Diabetics, Study Suggests
Researchers from Cedars-Sinai Medical Center examined 1 million first-time GLP-1 prescriptions in the U.S. between 2011 and 2023 and separated patients by those who took GLP-1s for type 2 diabetes, and those who didn’t have diabetes but took them for obesity or obesity-related health conditions like high blood pressure and heart disease. The amount of new patients prescribed GLP-1s for diabetes decreased by almost 10% between 2011 and 2023, while those who were prescribed the drugs for obesity or other obesity-related conditions more than doubled during the same time period, particularly since 2020, according to the study published Monday in the Annals of Internal Medicine.
Novo Nordisk’s semaglutide—the generic name for Ozempic, Wegovy and Rybelsus—was the most prescribed GLP-1 in 2023, making up over 88% of all new prescriptions. GLP-1s are medications designed to manage type 2 diabetes, heart disease and obesity by lowering blood sugar and A1C, interacting with the hunger part of the brain to suppress the appetite and slowing down the process of food emptying from the stomach, causing patients to feel full longer. The researchers warned the medications’ growing popularity among those with obesity could be exacerbating a nationwide drug shortage, and also raises concerns about “the need to ensure that patients with diabetes still have access to these treatments,” Dr. Yee Hui Yeo, the study’s co-first author and a clinical fellow in the Karsh Division of Gastroenterology and Hepatology at Cedars-Sinai, said in a statement.
Election 2024
- Trump Commits To Debating Harris, Would Be Willing To Do More Than One – The Hill
- Molinaro Talks About the 2024 Election and NY 19 – City & State
- Race For Congress In N.Y.: Swing District Democrats See New Energy With Harris – NY State Of Politics
- All NYS Delegates Vote to Support Harris at Convention – City & State
- Harris Campaign’s First Full Day: Record-Breaking Fundraising, Trump Attacks And Veepstakes Kick Off - Forbes
- Can Kamala Harris Beat Donald Trump? Here’s What The Polls Say – The Economist
- Rise Of Harris Roils Senate Battleground Races – The Hill
- 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
'A Year Of Progress': Vanguard's Annual 'How America Saves' Report
Despite stubborn inflation, retirement plan participant outcomes thrived in 2023, bolstered by strong growth in employee contributions and adoption of automatic enrollment, according to Vanguard's 23rd edition "How America Saves" report on the retirement savings behaviors of nearly five million American workers. "How America Saves 2024," Vanguard's 23rd edition of the annual report, details key trends surrounding retirement saving and how plan sponsors can respond to them and continue to optimize plan design to best serve plan participants.
One key finding: 401(k) plan participants saved at historic rates in 2023, with a record-high number of participants also increasing their savings rate. Vanguard found that the average participant deferral rate reached a record-high 7.4% in 2023. When combined with employer contributions, the average participant total savings rate reached 11.7%, also an all-time high. Other insights include: Autoenrollment bolsters savings, managed account advice is easier to access, target fund dates make choosing easier and 401(k) loan activity decreased.
CrowdStrike Warns of Hacking Threat as Outage Persists
The CrowdStrike glitch that caused outages for millions of users of Microsoft Windows devices last week continued to roil industries and snarl global air travel. Around 8.5 million devices were affected by the outage, CrowdStrike said in a statement, adding that it had brought a significant number back online. Warning customers that bad actors were trying to exploit the event, the company said it had identified a malicious file being sent around by hackers posing as a ‘quick fix’ to the problem. A file named “crowdstrike-hotfix.zip” was being distributed that included malware enabling hackers to remotely control or monitor a user’s device, CrowdStrike said in a blog post.
As companies and home users grappled with securing their tech, travelers faced a fourth day of flight snarls and long waits at U.S. airports, as airlines struggled to overcome disruptions caused by the outage. As companies and home users grappled with securing their tech, travelers faced a fourth day of flight snarls and long waits at U.S. airports, as airlines struggled to overcome disruptions caused by the outage.
Tesla Stages $386 Billion Comeback as Musk Elevates AI Over EVs
It’s been a volatile time even by Tesla standards, with the chief executive officer battling for more control of the company, turning back from a $25,000 electric vehicle and ordering mass layoffs. These erratic episodes helped send the stock on a 43% plunge as of April 23, the day Tesla last reported earnings. The shares have been on a tear since then, despite an uninspiring set of results and the downward trend in expectations for the second-quarter figures Tesla will report Tuesday. The main rouser of a rally that added more than $386 billion to Tesla’s market capitalization in just 11 weeks was none other than Musk.
The CEO managed to get investors to pay more mind to Tesla’s potential in a future dominated by artificial intelligence than its sluggish sales and earnings at present. His astute sense of what the market wants to hear and incessant salesmanship will be put to the test after the close, when the company is likely to post lower revenue for the second quarter in a row and a fourth-straight drop in profit. “The real game-changer for Tesla’s valuation lies in Musk’s ability to convincingly position the company as a leader in AI and autonomous technology,” said Adam Sarhan, founder and chief executive officer at 50 Park Investments. “This narrative shift is critical for justifying Tesla’s premium valuation compared to traditional automakers.”
GM Beats, Raises Full-Year Guidance For 2nd Straight Quarter On The Back Of Robust US Sales
GM once again posted strong second quarter results, and boosted its guidance for a second time this year as customers continue buying the Detroit-based automaker's gas-powered vehicles, trucks — and even EVs. For the quarter, GM reported record revenue of $47.97 billion versus $45.51 billion estimated (Bloomberg consensus), which represents a 7.2% jump compared to a year ago ($44.75 billion). GM reported adjusted EPS of $3.06, compared to estimates of $2.70, with GM also reporting adjusted EBIT (earnings before interest and taxes) of $4.438 billion, easily topping estimates of $3.88 billion.
Boosting guidance and returning cash in the form of buybacks to shareholderse is “coming from ICE [internal combustion engine] portfolio and underlying performance of the business… generating significant free cash flow,” GM CFO Paul Jacobson said in a call with reporters. GM authorized a $6 billion share buyback plan in June. In terms of its EV gameplan, GM reiterated it still expects to produce 200,000 to 250,000 EVs this year, slightly lower than the 200,000 to 300,000 unit plan, and a far cry from initial EV plans of 400,000 EVs produced by 2024.
UPS Drops Prices to Gain Inflation-Weary Customers
United Parcel Service UPS -11.79%decrease; red down pointing triangle cut prices to reverse a prolonged slump in package volume, and said it was still trying to win back customers who switched to rival parcel carriers last year amid a labor dispute at UPS. UPS reported weaker profit and revenue for the second quarter but recorded its first U.S. package volume growth since 2021. Average revenue per domestic package fell 2.6% from a year earlier, the company’s second straight quarter of price cuts.
The company’s shares fell in premarket trading after the package-delivery company trimmed its revenue outlook and posted quarterly results that missed Wall Street estimates. The parcel carrier’s customers are choosing cheaper and lengthier ground-delivery options over pricier overnight options that use planes, executives said. “We’re not chasing volume,” Chief Executive Carol Tomé said on a call with analysts. “We had new customers coming into our networks where volume blew up.” UPS said there have also been more e-commerce entrants using UPS’s Surepost service, its most economical option. China-backed e-commerce merchants Shein and Temu have been growing their customer base in the U.S.
Boeing Signs Drone Deal with Ukrainian Firm at Farnborough Airshow
Boeing has signed a preliminary agreement with Ukrainian aerospace and defense company Antonov, which could see the pair collaborating in the production of drones for the Armed Forces of Ukraine. The pair announced the memorandum of understanding on Monday at the Farnborough International Airshow, which promises to "explore opportunities to collaborate on defense-related projects."
According to a statement on Boeing's website, areas of potential cooperation include "training, logistical support and overhaul services for tactical unmanned aerial systems utilized by the Ukrainian Armed Forces." While Boeing manufactures several UAVs - including the lightweight RQ-21A Blackjack and the MQ-25 Stingray mid-air refueller - the company's statement made mention of the ScanEagle UAV, a lightweight, long-endurance drone manufactured by the Boeing subsidiary Insitu. Insitu claims that the 1.6-by-3.1-meter drone can fly for up to 18 hours, reach an altitude of 19,500 feet, and provide "persistent daytime and night time intelligence, surveillance and reconnaissance in some of the most extreme environments in the world." In August 2022, the U.S. Department of Defense promised to send 15 of these systems to Ukraine as part of a $755 million Security Assistance package.
Manufacturer To Pay $2.6 Million For Denying Ties To China When Applying For PPP Loan
Hemisphere GNSS (USA) Inc. has entered into an agreement with the U.S. Department of Justice (DOJ) to resolve allegations that the company provided false information when applying for and receiving forgiveness of a Paycheck Protection Program (PPP) loan. The DOJ claims that the company, which manufactures satellite global positioning systems, violated the False Claims Act in February 2021 when it applied for a second round PPP loan. Hemisphere stated that no “entity created in or organized under the laws of the People’s Republic of China” owned or held 20% or more of an economic interest in the company. Additionally, Hemisphere asserted that it did not “retain as a board member a person who is a resident of the People’s Republic of China.”
Both of these claims were determined to be false, thus negating the company’s eligibility for the PPP loan, which was later forgiven. To resolve these issues, Hemisphere has agreed to pay $2.6 million. In a recent quote, Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, said, “PPP loans were an important but finite resource available to help eligible small businesses retain employees and keep their doors open. When ineligible entities improperly sought PPP loans or forgiveness of those loans, they reduced the availability of this critical support for eligible businesses.”
$24-Billion Order for Airbus Jets, P&W Engines
Airbus has secured an expansive order for up to 152 new aircraft worth an estimated $24 billion from Cebu Pacific, a low-cost carrier that is The Philippines largest airline. The order was secured by a memo of understanding between the OEM, the airline, and Pratt & Whitney, which has been selected to supply its GTF engines as the power supplies for the new jets. It’s said to be the largest aircraft order in Philippine aviation history.
The airline’s CEO Michael Szucs called the order “a significant milestone in our ongoing mission to make air travel more accessible and affordable for everyone while supporting the Philippine growth story." According to information provided by Pratt & Whitney, the order covers 102 A321neo aircraft and purchase rights for 50 more jets from the A320neo series. The A321neo is a twin-engine, narrowbody aircraft that typically carries 180 to 220 passengers and is the longest variant of the A320neo series. Based on the A321 aircraft that was introduced in 1994, it was modified and reengined with the more fuel-efficient, geared turbofan GTF engine developed by Pratt & Whitney. The ‘neo’ suffix designates the “new engine option” introduced in 2017.
Read more at American Machinist
U.S. Electricity Prices Surge Amid Grid Strains and Rising Demand
U.S. consumers are set to pay higher electricity bills as power providers raise investments in much-needed grid improvements amid an old power system that is not designed to cope with soaring demand and more frequent extreme weather events. Over the past year, electricity price inflation has outpaced total consumer inflation in the United States. While encouraging signs have emerged that the Fed is winning some of the battle with high overall inflation, prices for electricity are set to continue rising in the coming years due to increasing demand and challenges in building transmission capacity.
According to the Electricity Transmission Competition Coalition, “the price of electricity continues to increase due to accelerating transmission costs that are not subject to competition.” “Less than 10% of all transmission projects are competitively bid,” ETCC said in May this year. The U.S. Energy Information Administration (EIA) also notes that transmission and distribution costs continue to rise, although electricity generation costs are declining. “As supply costs are decreasing, another portion of retail electricity prices, the cost for transmission and distribution, has risen as companies have developed new infrastructure or have replaced existing infrastructure to help integrate expanding renewable generation,” the EIA said in its forecast of residential electricity prices for this summer.