Member Briefing March 21, 2024
Fed Holds Rates Steady - Still Sees Three Interest-Rate Cuts This Year and Inflation Moderating
Federal Reserve officials didn’t significantly change their outlook for delivering interest-rate cuts later this year despite solid growth and firmer-than-anticipated inflation in recent months. Most officials penciled in three rate cuts this year in new projections, the same as in December. The central bank held steady its benchmark federal-funds rate in a range between 5.25% and 5.5%, a 23-year high.
Fed officials also expect inflation, excluding volatile food and energy prices, to end the year at a modestly higher level than they expected in December—at 2.6% instead of 2.4%. Those prices rose 2.8% in January. Officials marked up their growth outlook for 2024, with most expecting gross domestic product to expand by 2.1%. In December, they expected growth to advance 1.4% this year. Still, the projections showed some officials expect fewer cuts this year than they did in December. They penciled in a modestly slower pace of rate reductions next year, with their benchmark rate settling out just below 4% at the end of 2025 and slightly above 3% after that.
Fortune/Deloitte Survey: CEO Optimism Soars Amid Expectations for Fed Rate Cuts
Since 2020, Fortune and Deloitte have collaborated on a survey to understand CEO sentiment. While CEOs initially expressed confidence the first time we asked how they felt about the world economy in 2022, pessimism has been consistently the prevailing sentiment on the floors of multinational corporations. In the previous October 2023 survey, no less than 48% of CEOs believed conditions would deteriorate over the coming year, the bleakest turnout in 12 months. In January 2024 over a quarter of CEOs surveyed expressed optimism, by far the highest number over the past 12 months.
- 27%…of CEOs are bullish about the future of the global economy over the next 12 months. That’s a full 20 percentage points higher since the last survey when just 7% felt positive.
- 24%…of CEOs are pessimistic, a sharp improvement over 47% previously. What’s more, no one answered they were “very pessimistic” this time.
- 76%…of CEOs expect interest rates to ease by the end of September. Yet only 28% anticipate a move in the second quarter already—despite financial markets pricing in a likely first cut in June.
- 56%…of CEOs said their companies are using generative AI to make their companies more efficient, up from 39% in the previous survey.
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- ‘Hamas Gambled With Our Lives’: Gazans are Now Daring to Speak Out - CS Monitor
- ‘Part of My Core’: How Schumer Decided to Speak Out Against Netanyahu - NYT
- 5 Things to Know About Efforts to Feed People in Gaza - NPR
- Heavy Fighting Rages Around Gaza’s Biggest Hospital as Israel Raids it for a Second Day - AP
- EU Leaders Discuss Ukraine Aid, Gaza Cease-Fire in High-Stakes Summit – Politico
- Schumer's Shameful Speech Targeting Israel Is Deeply Disturbing For U.S. Security - Forbes
- 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
- EU to Cap Some Ukrainian Tariff-Free Imports - BBC
- Symbolism or Strategy? Ukraine Battles to Retain Small Gains - NYT
- Putin’s Forces ‘Drop 200 Bombs’ Near Border as Kyiv ‘Attacks Air Base in Russia’ – Independent
- Putin's War Fired Up Russia's Economy and Beat Sanctions — But Big Problems Lie Ahead - Insider
- EU Cash for Ukraine: The Bloc Agrees on a €5B Weapons Fund – Politico
- 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
- Ex-Army Generals Testify on Chaotic US Afghanistan Withdrawal - BBC
- Gangs Unleash New Attacks on Upscale Areas in Haiti’s Capital, With at Least 12 Killed - AP
- How China, Russia and Iran Are Forging Closer Ties – The Economist
- Leo Varadkar Steps Down as Irish Prime Minister in Shock Move - NPR
- Macron’s Government Steps into Antisemitism Controversy at Top French University – Politico
- MacKenzie Scott Donates $640m to US Non-Profits - BBC
- After 100 Brutal Days, Javier Milei Has Markets Believing - DW
- What’s Next for Vietnam After Vo Van Thuong Resigns? - Reuters
- What is Famine, When is it Declared and Why are Gaza and Sudan at Risk? -BBC
Policy and Politics
State Senate Passes NY HEAT Act, Other Utilities Legislation
The New York state Senate on Tuesday passed legislation aimed to make utility bills easier to pay for ratepayers, including the NY Heat Act, which aligns utility regulation with state climate justice and emission reduction targets. The NY HEAT Act, which passed 40-22, had been approved by the state Senate last year but the Assembly and Gov. Kathy Hochul have yet to find agreement on all variables of the legislation. The Chamber also passed a series of bills giving more power to the Public Service Commission to regulate utilities.
The bill is intended to limit costs to customers as New York state transitions away from natural gas while protecting them from predatory practices by capping utility costs at 6% of income for low- and moderate-income New Yorkers to prevent utility companies from hiking rates. Critics, including most utilities and businesses associations in the state argue that while the bill passes the costs of the CLCPA transition to other ratepayers while imposing even more unaffordable costs on consumers as reports suggest each customer will have to eventually pay to convert their house from natural gas to exclusively electric consumption.
Read more at NY State of Politics
Rand Paul Vows to Hold Up $1T ‘Minibus’ That Must Pass by Friday
Sen. Rand Paul (R-Ky.) says he will hold up a $1 trillion “minibus” spending package that needs to pass by the end of the day Friday to avoid triggering a partial government shutdown. “I will hold it up primarily because we’re bankrupt and it’s a terrible idea to keep spending money at this rate,” Paul told The Hill Wednesday. “The spending bills before us will lead to a $1.5 trillion deficit for the year. We’re borrowing about $1 trillion every three months. It’s an alarming pace of accumulation of debt,” he said.
Funding for the Departments of Defense, Labor, Health and Human Services, State and other federal agencies will expire at 11:59 p.m. on Friday. The Kentucky lawmaker said he would see to amend the package, which was crafted by a small group of congressional leaders and senior appropriators after negotiating with the White House. Rank-and-file lawmakers haven’t yet had a chance to review the legislation, which Speaker Mike Johnson (R-La.) told GOP colleagues would be made public as soon as Wednesday afternoon.
EPA Bans Last Form of Asbestos
On March 18 the EPA announced a final rule to prohibit ongoing uses of chrysotile asbestos, the only known form of asbestos currently used in or imported to the United States. Chrysotile asbestos is found in products including asbestos diaphragms, sheet gaskets, brake blocks, aftermarket automotive brakes/linings, other vehicle friction products, and other gaskets. The use of asbestos in the United States has been declining for decades, and its use is already banned in over 50 countries.
Although there are several known types of asbestos, the only form known to be imported, processed, or distributed for use in the United States is chrysotile. Raw chrysotile asbestos was imported into the United States as recently as 2022 for use by the chlor-alkali industry. Most consumer products that historically contained chrysotile asbestos have been discontinued. The chlor-alkali sector uses asbestos diaphragms to make sodium hydroxide and chlorine, a critical use of which is to disinfect drinking water and wastewater. There are other ways to disinfect water and other ways to produce chlorine; in fact, two-thirds of the chlorine produced in the U.S. is produced without using asbestos.
Health and Wellness
Intermittent Fasting May Raise the Risk of Cardiovascular Death
The safety of intermittent fasting, a popular strategy to lose weight by limiting food intake to certain times, was called into question by a surprise finding from research presented at a medical meeting. Limiting mealtimes to a period of just eight hours a day was linked to a 91% increase in risk of death from heart disease in the study, which was released on Monday in Chicago. The American Heart Association published only an abstract, leaving scientists speculating about details of the study protocol.
The researchers, led by Victor Zhong of the Shanghai Jiao Tong University School of Medicine, analyzed data from about 20,000 adults included in the US Centers for Disease Control and Prevention’s National Health and Nutrition Examination Survey. The study looked at answers to questionnaires along with death data from 2003 through 2019. Because it relied in part on forms that required patients to recall what they ate over two days, scientists said there was room for potential inaccuracies. About half of the patients were men and the mean age was 48. Some doctors questioned the study’s findings, saying they could have been skewed by differences between the fasting patients and the comparison group.
Election 2024
- California Special Election to Replace McCarthy Heads to Runoff, Extending House GOP Vacancy Another 2 Months - Fox
- Delaware Calls Off Republican Presidential Primary After Haley Removes Name from Ballot -AP
- Here Are the Only Swing Voters You Need to Care About in 2024 – Mother Jones
- 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
Intel Awarded Up to $8.5 Billion in CHIPS Act Grants, With Billions More in Loans Available
The White House said Intel has been awarded up to $8.5 billion in CHIPS Act funding, as the Biden administration ramps up its effort to bring semiconductor manufacturing to U.S. soil. Intel could receive an additional $11 billion in loans from the CHIPS and Science Act, which was passed in 2022. The awards will be announced by President Joe Biden in Arizona on Wednesday.
Intel has long been a stalwart of the U.S. semiconductor industry, developing chips that power many of the world’s PCs and data center servers. Intel said it would spend its CHIPS Act funds on fabs and research centers in Arizona, Ohio, New Mexico and Oregon. The company previously announced plans to spend $100 billion on U.S. programs and facilities. Intel has announced a plan to catch up in leading-edge manufacturing by 2026. Intel’s Ohio fab will cost more than $20 billion and Intel said it is expected to start production in 2027 or 2028. Intel is also expanding manufacturing operations in Arizona and New Mexico. Intel says the projects will create jobs for 20,000 people in fab construction and 10,000 people in chip manufacturing.
Boeing Has Put Production Over Safety, FAA Head Says Amid 737 Controversies
Federal Aviation Administration chief Michael Whitaker criticized Boeing’s safety culture in an interview with NBC, arguing the company has prioritized production rather than safety, the latest criticism levied at the aircraft manufacturer following a January incident in which a Boeing 737 MAX 9 door plug blew out in the middle of an Alaska Airlines flight. Whitaker told NBC anchor Lester Holt in an interview that Boeing’s priorities have “been on production and not on safety and quality,” citing a culture survey of Boeing and the FAA’s audit into the company.
Whitaker said the FAA’s focus is to shift Boeing’s attention to safety and quality. When asked if certain protocols weren’t being met in terms of Boeing’s airplane production, Whitaker said the company’s process was “not what you would’ve expected if safety is the first priority,” adding if aircraft company procedures and production don’t make for a safe experience, “then the whole system is not working the way it should.” Boeing didn’t immediately respond to Forbes’ request for comment.
TSMC, Intel Suppliers Delay U.S. Plants on Surging Costs, Labor Crunch
At least five suppliers to Taiwan Semiconductor Manufacturing Co. and Intel have delayed construction of facilities in Arizona, a sign that rebuilding America's chip supply chain is a bigger challenge than expected. Chemical and material makers LCY Chemical, Solvay, Chang Chun Group, KPPC Advanced Chemicals (Kanto-PPC) and Topco Scientific all announced plans and bought land to build facilities in Arizona after the world's two top chipmakers, TSMC and Intel, rolled out their own multi-billion-dollar investments in the state.
But construction of these facilities -- which are vital for building a complete chip supply chain -- has been put on hold or significantly scaled back, multiple chip industry executives briefed on the matter told Nikkei Asia. In some cases the delays are expected to be temporary, while in others the projects will be subject to later review, with no clear timeframe on when they might be reactivated. Most of those affected attribute the postponements to surging costs for building materials and labor, as well as a shortage of construction workers. A flood of investment into the state for a wide range of sectors, including chips and automobiles, has squeezed the building sector.
California Signs Deal with Stellantis to Uphold Vehicle Emissions Rules
Stellantis, one of the largest automakers in the world, agreed Tuesday to comply with California’s vehicle emissions standards that are the toughest in the nation and require zero-emission and plug-in hybrid vehicles to make up 68% of new light-duty vehicle sales by 2030. Stellantis now joins four big automakers — Ford, Honda, Volkswagen and BMW — that agreed to follow California’s rules in 2019.
The move by the company that makes vehicles for Chrysler, Dodge and Jeep was seen as a boost to Democratic Gov. Gavin Newsom’s ambitious policies to curtail global warming. The Biden administration restored the state’s authority to set its own tailpipe pollution standards for cars in 2022 after former President Donald Trump’s decision to revoke California’s authority to set its own limits on auto emissions. It was one of Trump’s most high-profile actions to roll back environmental rules he considered overly burdensome on businesses.
Americans Oppose LNG Export Pause, NAM Poll Finds
Americans overwhelmingly support exporting U.S. natural gas, a new NAM poll reveals. In addition to wanting continued exports of LNG, respondents believe the U.S. must boost its production of oil and natural gas, build more energy infrastructure and reform the broken permitting system, according to the findings of an NAM survey of 1,000 registered voters conducted March 15–18.
In January, the Biden administration announced a moratorium on LNG export permits. Among the survey’s key findings: Some 87% believe the U.S. should continue exporting natural gas. About 86% say the permitting system must be changed so energy projects are approved and online in less time. Approximately 76% say the U.S. needs more energy infrastructure, such as port terminals. About 74% say the U.S. needs to increase domestic oil and natural gas production. And 72% would like to see the U.S. use an all-of-the-above energy approach that includes both traditional and renewable energy sources. “This poll underscores the need for President Biden to immediately direct the Department of Energy to roll back this misguided and counterproductive policy.”
Competing Interests Have Stalled Progress on a Worldwide Agreement to End Plastic Pollution.
The global plastics treaty is in serious trouble. The third of five planned negotiating sessions of the United Nations Intergovernmental Negotiating Committee (INC-3) ended in Nairobi, Kenya, last November without meeting its goals of creating a full draft of the treaty and scheduling a robust round of working sessions before the fourth meeting in Ottawa in April. Environmental groups claim some oil-producing countries and industry groups are using stalling tactics to try to water down the treaty.
It was easy for the 1,900 delegates from 161 countries, and lobbyists representing 143 chemical and fossil fuel companies, who showed up for the first negotiating session in Uruguay to agree there is a problem and action is needed. Optimistic reports from INC-1 and INC-2 in Paris seemed to indicate it might be possible to write a binding, worldwide treaty that would end plastic pollution by 2040. The wheels started to come off in Nairobi.
Read more at Plastics Machinery & Manufacturing
DOE Eyes 20 Times More Geothermal Power
Geothermal energy produced from heat beneath the Earth’s surface could increase twentyfold in the U.S. by 2050 and play a key role in providing a clean alternative to fossil fuel power, according to a new Department of Energy report. But unlocking its full potential will require developers to prove their competitiveness by lowering the cost of production and drawing power from new geothermal locations, said the DOE report, which was released Monday.
Tapping new sites to harness energy would allow geothermal generation to grow from a current total capacity of roughly 3,700 megawatts to at least 90,000 MW by 2050. With the development of storage capabilities and other technologies, DOE estimated the capacity could be as high as 300,000 MW. Enough geothermal energy exists beneath the Earth’s surface to power the entire world thousands of times over, but harnessing it involves drilling deep and bringing hot fluids to the surface that contain energy to spin turbines in power plants. Limits to drilling technology, as well as the high upfront cost of building power plants, has held the industry back. Currently, geothermal energy accounts for 0.4 percent of the nation’s electricity, with power coming from 93 power plants across seven states.
Keurig’s Sustainable Redesign
It’s a tiny pod, but over the course of a year, Keurig estimate that adds up to more than 30 billion discarded plastic capsules. That poses a huge environmental challenge. John Sylvan has said he regrets inventing the Keurig because of its environmental impact. (I bet he also regrets selling his share of the company for $50,000 in 1997.) Now Keurig’s parent company, Keurig Dr. Pepper, is looking to change that.
The company assembled an in-house team and has spent the last few years exploring ways to eliminate single-use plastic pods. Their development, K-Round, wraps the coffee grounds in a compostable coating. The company expects to begin beta-testing in the fall and start selling to the public shortly thereafter. This redesign will help Keurig lessen its environmental footprint, but it requires customers to purchase a new machine to use the K-Rounds. As a result, it will take many years for customers to make the transition. Keurig has also taken steps toward sustainability in the past several years, including eliminating nonrecyclable plastic in K-Cups, making them curbside recyclable; and transitioned away from virgin to recycled plastic in some machines.
Nikola’s Rollout of Hydrogen Trucks Is Hitting Supply-Chain Hurdles
Supply-chain shortages are slowing the rollout of Nikola’s hydrogen-powered big rigs. Steve Girsky, Nikola’s chief executive, says a shortage of pressurized fuel tanks and electric batteries is delaying production of the newest zero-emission technology for truckers. The hangups are hitting as demand for zero-emission big rigs grows, especially in California, where new emissions regulations and generous grants are making the Class 8, heavy-duty trucks more attractive.
Nikola is leading a pack of truck makers, including Kenworth and Hyundai Motor, developing hydrogen fuel-cell big rigs. The clean-energy trucks refuel faster than battery-electric trucks and can travel two or three times as far between refueling, but they also are far more expensive to buy than diesel big rigs. Nikola is opening its own hydrogen refueling stations to support demand for its trucks, but for now it is limiting the stations to California.