Member Briefing March 15, 2022

Posted By: Harold King Daily Briefing,

Invasion of Ukraine Headlines

The Inflation Hits Just Keep Coming, Raising Stakes for the Fed 

Before Moscow’s invasion three weeks ago, Federal Reserve Chairman Jerome Powell had begun laying the groundwork for a more aggressive series of rate increases, driven by concerns that labor markets were overheating. He and his colleagues were also banking on getting an assist from recovering supply chains later this year, limiting how far rates would have to rise.  Now, the global economy faces the prospect of higher energy and commodity prices, which will raise the costs to transport and manufacture a range of goods, while the conflict further disrupts global shipping networks. The threat is unlikely to alter what the Fed does at its meeting this week. Mr. Powell said earlier this month that the central bank wants to avoid adding to volatility at a time when geopolitical uncertainty has already raised the risk of a sharp pullback in risk-taking by investors.

Powell signaled that the Fed would kick off an expected series of rate rises this week with a quarter-percentage-point increase, rather than a half-point, which a few Fed officials had floated and some investors had said would be appropriate. But he hinted that a series of shocks, including the Russian invasion, could keep inflation uncomfortably high, potentially calling for larger rate rises this summer.

Read more at the WSJ

NY Lawmakers Lay out State Budget Priorities for Housing, Child Care

State lawmakers this week are set to propose billions of dollars in spending meant to bolster struggling New Yorkers.  The budget resolutions being proposed by the Democratic-led state Senate and Assembly amount to roadmaps for lawmakers, laying down public markers for the posture they are taking with Gov. Kathy Hochul. 

Hochul last week told reporters she is not yet adjusting her own $216 billion spending plan proposed in January, but pointed to the proposals to set money aside in the state’s reserve fund to gird against a potential recession. For now, she is yet to embrace calls for reducing the state’s per-gallon gas tax. Republicans in the state Senate, meanwhile, have called for tax and spending restraint. GOP lawmakers last week called for property tax relief as well as reductions in costs for small businesses while also boosting support for manufacturing. 

Read more at State of Politics

New Wave of Inflation – and Disruptions – Hits U.S. Factory Floors

Manufacturers are struggling with order cancellations, worker attrition, supply chain disruptions and rising prices for energy and materials. “My biggest concern now is that the confluence of Ukraine and the semiconductor shortages and everything else in global logistics will become a demand constraint,” says Husco International CEO Austin Ramirez.

The current wave of disruptions come as many manufacturers felt they were starting to untangle supply chain and labor problems created by the COVID-19 pandemic. Backlogs at major U.S. ports have declined in recent weeks, for instance. And it remains too early to fully assess how much the crisis in Ukraine will slow a return to normal operations – or create new issues.

Read more at Reuters

US COVID – US Sewer Data Warns of a New Bump in COVID Cases After Lull

More than a third of the CDC’s wastewater sample sites across the U.S. showed rising COVID-19 trends in the period ending March 1 to March 10, though reported cases have stayed near a recent low. The number of sites with rising signals of COVID-19 cases is nearly twice what it was during the Feb. 1 to Feb. 10 period, when the wave of omicron-variant cases was fading rapidly.

“While wastewater levels are generally very low across the board, we are seeing an uptick of sites reporting an increase,” Amy Kirby, the head of the CDC’s wastewater monitoring program, said in an email to Bloomberg. “These bumps may simply reflect minor increases from very low levels to still low levels. Some communities, though, may be starting to see an increase in COVID-19 infections, as prevention strategies in many states have changed in recent weeks.”

Read more at the Denver Gazette

Moderna President Says 4th COVID-19 Shot is Only Necessary for Older and Immunocompromised

Two years into the pandemic, pharmaceutical executives are divided over whether additional COVID-19 shots are necessary for everyone. Pfizer CEO Albert Bourla told CBS’s “Face the Nation on Sunday that a fourth dose, or second booster shot, was indeed necessary, since a third dose doesn’t protect well against infections and immunity wanes quickly. COVID-19 vaccines still offer strong protection against hospitalization and death.

But Moderna President Stephen Hoge told Insider on Monday that people can be more selective about boosters from now on. “For those who are immune-compromised, those who are older adults, over the age of 50 or at least 65, we want to strongly recommend and encourage [a fourth shot], the same way we do with flu vaccines,” he said.

Read more at Business Insider

China Locks Down a City of 9 Million Amid a New Spike in COVID-19 Cases

China on Friday ordered a lockdown of the 9 million residents of the northeastern city of Changchun amid a new spike in COVID-19 cases in the area attributed to the highly contagious omicron variant. Residents are required to remain home, with one family member permitted to venture out to buy food and other necessities every two days. All residents must undergo three rounds of mass testing, while non-essential businesses have been closed and transport links suspended.

The latest lockdowns, which also include Yucheng with 500,000 people in the eastern province of Shandong, show China is sticking to the draconian approach to the pandemic it has enforced for most of the past two years, despite some earlier indications that authorities would be implementing more targeted measures.

Read more at NPR

U.S. Chamber of Commerce Urges Focus on Energy and Food to Combat Historic Inflation

In response to the new CPI numbers, Neil Bradley, Executive Vice President and Chief Policy Officer at the U.S. Chamber of Commerce, said the following in a statement he released yesterday:

“We urge policymakers to focus on three key areas that have a large impact on family budgets and the overall economy: energy, food, and housing. It’s time now for the administration to partner with domestic energy producers to remove regulatory red tape and make it easier to produce more oil and gas here in America. Congress and the administration should act now to support American farmers in increasing production, to help offset what will be lost in Ukraine and Russia, including by dealing with rising energy costs and potential fertilizer shortages.” 

Read the Statement

More COVID Supply Chain Risk

COVID restrictions have come to an end in many parts of the world as governments establish “live with the virus” policies, but one nation stands out in this regard: China. The country has continued to pursue a “zero-COVID” strategy, imposing strict lockdowns and containment measures to prevent viral transmission among its population. However, a growing wave of local cases is seeing authorities double down on the policy and that’s getting investors nervous about the economy.

China just placed the 17.5M residents of Shenzhen into lockdown for at least a week, which will be accompanied by three rounds of city-wide testing. All bus and subway systems were closed, while businesses, barring those that provide essential services, have been shuttered. The decision resulted in Foxconn, a key Apple supplier, to halt production as the virus spreads across the technology hub. Shenzhen also features the headquarters of tech giants Huawei, Tencent and EV maker BYD. Similar measures are impacting Hong Kong, Shanghai and other regions as a spike in coronavirus infections leads to a worsening outbreak. 

Read more at Seeking Alpha

War in Ukraine is Ravaging the World’s Wheat Supplies

On Monday Russia released data on its latest wheat export volumes. They are not cause for alarm: wheat is usually harvested in the summer, and by February most ships are gone. But the future is more worrying. Russia and Ukraine account for 29% of global wheat exports. In Ukraine the crop may not be planted at all this year; Russia’s ostracism means few will want to take the financial and reputational risk of buying its grain. Both have banned wheat exports anyway.

Yet Russia and Ukraine are the prime breadbasket for about 800m people in Africa, Asia and the Middle East. The warring countries are also among the top five exporters of many other staples, from barley to sunflowers. Altogether their food exports account for 12% of globally-traded calories. Russia and Belarus, which is also under sanctions, are major suppliers of critical ingredients for fertilizers. However the war ends, it will cause people to go hungry.

Read more at the WSJ

Nickel Price Surge Puts Chinese Manufacturers in a Bind

The unprecedented surge in nickel prices on the London Metal Exchange has disrupted the operations of producers and manufacturers in China that make nickel-related products, showing how the trading fiasco is reverberating across the supply chain for the widely used material.

The sharp increase in prices—which were partly caused by Russia’s invasion of Ukraine—is impacting companies far and wide. In Australia, a base-metals producer said Monday that its planned $800 million purchase of a nickel miner could be delayed because of the huge nickel price move.

Read more at the WSJ

NIH Launches Clinical Trial of Three mRNA HIV Vaccines

The National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health, has launched a Phase 1 clinical trial evaluating three experimental HIV vaccines based on a messenger RNA (mRNA) platform—a technology used in several approved COVID-19 vaccines. 

The HVTN 302 study will examine whether the following three experimental HIV mRNA vaccines are safe and can induce an immune response. Each investigational vaccine candidate is designed to present the spike protein found on the surface of HIV that facilitates entry into human cells. Each of the experimental vaccines encodes for different but highly related, stabilized proteins. None of the three vaccine candidates can cause HIV infection.

Read more at NIH

Pratt & Whitney Digitalizing F119 Engine Monitoring

Pratt & Whitney has started a new maintenance program it calls a “first… in aerospace propulsion history”, for F119 engines powering U.S. Air Force F-22 Raptor fighter aircraft. The new approach is based on digitally combining flight data with engineering algorithms to plan engine maintenance on an as-needed basis. The engine builder indicated this “usage-based lifing” (UBL) program could save the USAF more than $800 million over the life of the program.

By incorporating UBL techniques, the USAF and Pratt & Whitney will plan maintenance based on large amounts of real-time data on engine components based on how it is actually being flown, versus an assumed mission mix. This constant flow of data will be re-analyzed continuously and will allow the USAF to take advantage of the full life of the engine – improving readiness and reducing maintenance time and costs.

Read more at American Machinist

Bantam Tools Desktop CNC 4th Axis Accessory

Expanding the abilities of the compatible Bantam Tools Desktop CNC Milling Machine, the Bantam Tools Desktop CNC 4th Axis Accessory enables users to machine parts with more complex geometries. The accessory allows users to turn their 3-axis CNC machine into a 4-axis machine quickly and easily.

With a beginner-friendly design, users are able to level up their machining skills. It reducecs machining complexity with parts that require machining on multiple sides, and it offers more machining options for 3D surfacing.

Read more at New