Member Briefing June 11, 2024
With No Rate Cut Expected, Here’s What To Watch At June’s FOMC Meeting
The next Federal Reserve meeting begins today and concludes Wednesday. While there is essentially no chance of a Fed rate cut this week, the meeting will be key for setting market expectations for possible easing later this year. The Fed meeting announcement will take place on Wednesday at 2 p.m. ET. The central bank also will release its latest economic projections as well as policymakers' "dot-plot" rate outlook.
At the Federal Reserve meeting in March, policymakers narrowly favored three rate cuts in 2024, but with several hawks favoring just two Fed rate cuts. Since then, the lines have changed. Markets only see a 2.2% chance of a quarter-point rate cut at the June 11-12 Federal Reserve meeting, according to the CME FedWatch Tool. It was 70.1% back on March 27. By the final Federal Reserve meeting of the year on Dec. 17-18, investors see an 86.3% chance of a Fed rate cut, and still 13.7% odds of now cut at all in 2024. Markets see a 46.2% chance of two rate cuts this year, and only 10.9% for 75 basis points.
Wholesale and Retail Inventories Tick Higher
In April, sales of merchant wholesalers increased 0.1% from the revised March level and rose 1.4% compared to the revised April 2023 level. The percent change from February 2024 to March 2024 remained unrevised from the preliminary estimate, showing a decrease of 1.3%. At the end of April, total inventories of merchant wholesalers inched up 0.1% from the revised March level.
However, total inventories are down 1.7% from the year-ago period. The percent change from March to April was revised down to 0.1%. The inventories/sales ratio for merchant wholesalers was 1.35, compared to 1.39 in April 2023. Inventories for durable manufacturing is higher by 2.6% in the past year, but the inventory/sales ratio is relatively unchanged at 1.83. Inventories for nondurable manufacturing is down 8.4% in the past year, and the inventory/sales ratio is down from 1.02 to 0.92.
Read more at The Census Department
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- Biden Backtracks Criticism Of Netanyahu Again - Forbes
- How Israel Saved a Hostage Rescue Mission That Nearly Failed - WSJ
- Benny Gantz: a Former Israeli General With Big Political Ambitions – France 24
- Eyeing Showdown With Hezbollah, Israel Presses Shadow Campaign in Syria – Reuters
- US Pushes for Gaza Cease-Fire With Middle East Talks, Security Council Resolution - VOA
- UN Security Council Backs Plan for Israel-Hamas Ceasefire – Reuters
- Blinken Returns to Middle East as Israel-Hamas Ceasefire Proposal Hangs in Balance – France 24
- Iran OKs 6 Candidates for Presidential Race, but Again Blocks Ahmadinejad - 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
- Ukrainian Drones May Have Hit A Second Su-57 Stealth Fighter At Its Base In Russia - Forbes
- Confident Putin Warns Europe is ‘Defenceless’ - BBC
- European Banks are Making Heady Profits in Russia – The Economist
- Moscow Could Deploy ICBMs in Mexico, Russian TV Claims - Newsweek
- Belarus and Russia to Conduct Joint Nuclear Drills - Politico
- Switzerland: 90 Countries, Groups to Attend Ukraine Peace Conference - VOA
- Russia Is Sending Young Africans to Die in Its War Against Ukraine – Bloomberg
- 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
- Economy, Migration, War Top Voters' Concerns in EU Election – Survey - Reuters
- Map Shows Countries Where Far-Right Is Making Gains in Europe – Newsweek
- Far-Right National Rally List Tops 93% of French Electoral Districts in EU Elections – France 24
- Aircraft Carrying Malawi Vice President and Nine Others Goes Missing – Reuters
- Macron Takes Huge Risk With Surprise Election - BBC
- China's Economy Dealt Trade Blows – Newsweek
- Indian Election: The People and Places that Turned Away From the BJP – The Economist
- 'Worst Results Since WWII': Scholz's SPD Party Suffers Rout at EU Elections – France 24
- Have Milei's First Six Months Improved the Argentine Economy? - BBC
Policy and Politics
NYS Legislative Session Ends With HEAT Act and Plastic Packaging Law Stalled
New York State lawmakers ended their session over the weekend, leaving a number of issues on the table. Final negotiations on several major issues were derailed after Gov. Kathy Hochul made a surprise decision to halt a planned congestion pricing in Manhattan, less than a month before it was scheduled to begin. While two bills championed by the governor to regulate children’s social media feeds quietly passed, several environmental and climate change related did not make it to the finish line. They include the NY HEAT Act, which would stop utilities from automatically charging ratepayers for new gas lines, an expanded bottle deposit law, and a measure to reduce plastic packaging.
Hochul, as well as leaders of the legislature, say that this might not be the end of their meetings in 2024 They say they may need to return before the end of the year, to address the funding crisis caused by Hochul’s decision to pause congestion pricing.
Read more at North Country Public Radio
Cuomo to Testify Before House Coronavirus Subcommittee on Today
The Select Subcommittee on the Coronavirus Pandemic will conduct a transcribed interview with former New York Governor Andrew Cuomo June 11, 2024. Governor Cuomo will be asked to explain the circumstances surrounding his issuance of New York’s deadly “must-admit” COVID-19 nursing home guidance. Chairman Brad Wenstrup (R-Ohio) was previously forced to announce a subpoena to compel Governor Cuomo to appear before the Select Subcommittee.
Prior to the subpoena, Governor Cuomo repeatedly attempted to delay the Select Subcommittee’s efforts by not responding to requests for weeks, ignoring attempts to negotiate interview dates and times, and providing unreasonable availability — nine months after the interview was originally requested. During negotiations following the subpoena, Governor Cuomo made the decision to cooperate and appear before the Select Subcommittee for a voluntary transcribed interview.
CBO Warns Rising Debt Will Reduce Americans’ Income
The US national debt just hit a new all-time high of $34.667 trillion. New numbers from the Treasury Department’s Debt to the Penny system show the country’s national debt reached the milestone on Friday, May 31st. That’s a $677 billion increase from the start of 2024, when the nation’s debt stood at $33.990 trillion. The new record high comes amid a report from the Congressional Budget Office (CBO) warning that the greater the nation’s debt, the less money Americans will earn.
“Rapidly rising debt could reduce income growth by 33% over the next three decades and 42% annually by FY 2049. Rapidly rising debt would reduce projected income by about $14,500 per person in FY 2054, in today’s dollars.” The CBO says the reduction in household income is due to “crowding out,” an economic theory that traces how high debt and deficits slow economic growth on national and individual level. “High and rising debt hinders economic growth by crowding out investments, pushes up interest rates, strains the federal budget through rising interest payments, creates geopolitical challenges and risks, makes responding to new emergencies more challenging, imposes burdens on future generations, and increases the risk of a fiscal crisis.”
Health and Wellness
Moderna's COVID-Flu Vaccine Shows Stronger Immune Response Than Individual Shots, Late-Stage Trial Finds
Moderna’s combination shot is made up of components from two of Moderna’s other experimental shots for seasonal flu and COVID-19, both of which have shown promise in late stage clinical trials that tested them on their own. This trial tested the combination vaccine in two groups of roughly 4,000 adults, one aged 65 and older and other between 50 and 64 years, and used blood tests to assess the strength of immune response generated by two different vaccines for the viruses administered at the same time.
In the older age group, Moderna pitted its candidate, called mRNA-1083, against its own currently licensed COVID-19 vaccine, Spikevax, and Sanofi Pasteur’s flu shot, Fluzone HD, and in the younger group it compared the combination shot against Spikevax and GSK’s shot Fluarix. In both age groups, Moderna said participants receiving the combination vaccine generated “significantly higher immune responses” against a number of influenza strains, as well as against Sars-CoV-2, the virus that causes COVID-19, after a single dose. Moderna has not published data from the trial or opened it up to external scrutiny but said it plans to present data at an upcoming medical conference and submit it for publication, adding that it will “engage with regulators on the next steps for the program.”
Election 2024
- How Could the Race for Wisconsin Decide the Election? – The Economist
- ‘Turning the corner’: Biden Ramps up Campaign to Calm Democratic Nerves – Politico
- Biden’s Team Asks CEOs How to Further Boost the Economy While Trump Says Business is on His Side - AP
- RFK Jr. Claims Ballot Access in Enough States to Win White House in November – 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
Officials Await Underwater Survey Results Before Full Channel Into Port of Baltimore Reopens
It remains unclear when exactly the full federal channel into the Port of Baltimore will reopen, despite Francis Scott Key Bridge collapse response officials previously saying it would be by Monday. A spokesperson for the Army Corps of Engineers’ Baltimore District said early Monday afternoon that the agency was still awaiting final underwater survey results, and that more definitive answers were expected later in the afternoon.
The district’s commander, Estee Pinchasin, said in a statement posted on the agency’s social media accounts over the weekend that crews would sweep the area with sonar, LIDAR and magnetometer to “investigate any high spots, ensuring there’s no hazard to navigation.” In the statement, which was also sent in a Monday morning news release from Key Bridge Response Unified Command, Pinchasin said the corps remained “confident” that the channel would be “fully restored in the next few days.” She described the surveys as “the same detailed process” used with temporary channels as well as the 400-foot-wide limited-access channel currently used for large vessels.
Read more at The Baltimore Sun
The U.S. Commercial Space Program had a Stellar Week.
Aerospace rivals Boeing and SpaceX both notched major accomplishments this week that show just how far the commerical space race--and SpaceX in particular--has pushed the U.S. into a leadership position globally. NASA astronauts Barry "Butch" Wilmore and Sunita Williams successfully docked at the International Space Station (ISS) on Boeing's Starliner capsule Thursday. "Nice to be attached to the big city in the sky," Wilmore said during a live transmission of the docking.
Both represent major accomplishments for NASA and the U.S., which now has two commercial options for flying astronauts to space, a capability that "no other country has," says Todd Harrison, a senior fellow at the American Enterprise Institute. But they also highlight some big differences between Boeing and SpaceX. "When the contracts were initially awarded, Boeing was considered the incumbent and SpaceX was kind of the long shot bet," Harrison says. "It's kind of remarkable that the upstart, new company beat the long-time incumbent in this area. But to its credit, Boeing has come back, and now they have delivered a capability for NASA."
A New Way to Make Green Steel
Making steel has long been defined by flying sparks and blast furnaces roaring at temperatures hotter than molten lava. A startup backed by Amazon.com and steel producer Nucor says it has a new process that works at temperatures cooler than freshly brewed coffee. The breakthrough escalates a potentially lucrative global race to clean up a roughly $1 trillion industry that serves builders who erect everything from apartment buildings to bridges. The main production method used today generates roughly two tons of carbon emissions for every ton of steel, making the sector account for about 10% of global emissions.
Colorado-based Electra has begun producing iron plates that can be used to make steel without consuming fuels such as coal, natural gas or hydrogen—an initial step to potentially reducing the industry’s huge carbon footprint. The company dissolves iron ore in a chemical solution, then runs electricity through it to separate pure iron from impurities. The process runs at temperatures around 140 degrees Fahrenheit, a fraction of the 3,000 or so degrees needed for conventional steelmaking.
Cornwall Gen Z Electrician is Making #BlueCollar Cool
Most of the time, when Lexis Czumak-Abreu is stripping cables in a ditch or troubleshooting a sparking outlet, the size of her fan base doesn’t mean too much to her. But then she’ll be strolling through the airport in Las Vegas, and a stranger will call her name. Some 2.2 million people on TikTok, Instagram and Facebook watch Czumak-Abreu do her work as an electrician in Cornwall, N.Y. Maybe you are one of them. Did you see her recently atop a bucket truck, adding utility outlets to power poles? Or fixing an electric panel in a water-damaged basement?
Some 2.2 million people on TikTok, Instagram and Facebook watch Czumak-Abreu do her work as an electrician in Cornwall, N.Y. Maybe you are one of them. Did you see her recently atop a bucket truck, adding utility outlets to power poles? Or fixing an electric panel in a water-damaged basement? Czumak-Abreu’s path is one that more young Americans are considering. Skepticism about the cost and value of four-year degrees is growing, and enrollment in vocational programs has risen as young people pursue well-paying jobs that don’t require desks or so much debt and come with the potential to be your own boss.
Deja Vu: Container Shipping Market Faces Repeat of Pandemic Chaos
The container shipping industry is experiencing a worrying trend – a repeat of the supply chain disruptions that plagued the world during the pandemic. This shortage of ships, coupled with high demand, threatens to send shipping rates soaring and cause significant delays. Unless there’s a quick turnaround, freight rates could skyrocket, potentially reaching a staggering $10,000 to $20,000 per container on key trade routes. Additionally, disruptions like the Red Sea crisis and congestion at Asian ports could exacerbate the situation, leading to major delays.
- Lessons Learned, Lessons Forgotten? Looking back at the pandemic offers valuable insights into navigating this crisis. Here are some key trends re-emerging:
- Soaring Charter Rates: The cost to rent ships (charter rates) is rapidly climbing, with rental periods extending. This signifies a clear shortage of available ships.
- Domino Effect on Regional Markets: Similar to the pandemic, smaller ships are being pulled from regional routes to handle more profitable long-distance journeys. This can lead to price hikes and capacity limitations in regional markets.
- While some shippers might argue that exorbitant rates threaten their business models and potentially fuel inflation, the root cause remains – lack of capacity. When demand outstrips supply, someone loses out. In the container shipping world, those willing to pay the highest price secure the coveted spots.
- The current situation isn’t just a pricing game between carriers and shippers. It’s a fierce competition among shippers themselves, mirroring the scenario witnessed during the pandemic.
Japan’s Economy Falters
The Japanese economy shrank at almost the same pace as initially estimated in the January-March quarter due to sluggish spending by households and companies, revised government data showed Monday. Real gross domestic product contracted 1.8% on an annualized basis in the first quarter of 2024, compared with a 2.0% contraction recorded in the preliminary estimates released in mid-May. It shrank 0.5% from the previous quarter.
The revised data showed that consumer spending declined 0.7% from the previous quarter, unchanged from the preliminary reading. Capital expenditure fell 0.4%, compared with a 0.8% drop in the preliminary estimates.
Robot Prices Fall - Material Handling Units Lead Global Sales
While the global market for industrial robots hit 500,000 units in 2023, it was similar to volumes for 2022. However, the average price decreased last year according to Interact Analysis. After a record high in 2021, 2023 reached a low point in terms of revenues and shipments but the long-term forecast remains positive. The global industrial robot market is expected to grow on average, by 3.7% per year between 2024 and 2028.
The top three most common applications – material handling, welding and assembly – accounted for over 70% of industrial robot market revenues in 2023, with material handling accounting for one third on its own. This common application is particularly dominant in the Americas and Europe. The American market has the highest market concentration globally, where the top 5 suppliers shared nearly 80% of revenues and over 2/3 of unit shipments.
Read more at Material Handling & Logistics
Bill Gates Moves Ahead With Nuclear Project Aimed at Revolutionizing Power Generation
Bill Gates and his energy company are starting construction at their Wyoming site for a next-generation nuclear power plant he believes will “revolutionize” how power is generated. The co-founder of Microsoft is chairman of TerraPower. The company applied to the Nuclear Regulatory Commission in March for a construction permit for an advanced nuclear reactor that uses sodium, not water, for cooling. If approved, it would operate as a commercial nuclear power plant. The site is adjacent to PacifiCorp’s Naughton Power Plant, which will stop burning coal in 2026 and natural gas a decade later, the utility said. Nuclear reactors operate without emitting planet-warming greenhouse gases. PacifiCorp plans to get carbon-free power from the reactor and says it is weighing how much nuclear to include in its long-range planning.
Advanced reactors typically use a coolant other than water and operate at lower pressures and higher temperatures. Such technology has been around for decades, but the United States has continued to build large, conventional water-cooled reactors as commercial power plants. The Wyoming project is the first time in about four decades that a company has tried to get an advanced reactor up and running as a commercial power plant in the United States, according to the NRC.
Some Bosses Admit Office Mandates Have A Goal Of Making People Quit
Employees have long questioned whether return-to-office mandates—especially when launched amid a drop in sales, a falling stock price or other difficult news—are really “soft layoffs,” or job cuts in disguise. Now, a new survey shows that at least in some cases, they may be right. A report commissioned by software firm BambooHR has some managers saying the quiet part out loud: About one in five HR professionals (18%) say they hoped for some voluntary turnover among workers after implementing an RTO plan. And nearly 37% of all managers in the survey said they believe their organization did layoffs because fewer workers than hoped for decided to quit due to the mandate.
Meanwhile, nearly two-thirds (64%) of workers in the survey based remotely acknowledged that they make efforts to create a constant online presence, a phenomenon the report calls the “green status effect.” It describes workers using their Slack or Teams icons to suggest they’re online, even if they’re not working. The report comes as more big companies have been tightening office work expectations, which at times may require relocation. Walmart said last month it would cut “several hundred” corporate positions at the same time it shared that it would be asking the majority of employees who work remotely to relocate to its headquarters in Arkansas or offices in San Francisco or the New York area.