Member Briefing March 26, 2024
New Home Sales Slip in February
New home sales dipped 0.3% to a 662K-unit pace during February. The slight decline occurred against a backdrop of mortgage rates creeping higher during the month. Despite easing a bit recently, affordability is still a major constraint on homebuyer activity and the edge-up in financing costs looks like it was enough to discourage transactions. More resale inventory coming to market also may have cut into sales during the month. A strengthening trend largely remains intact, however, with sales up 5.9% on a year-over-year basis in February. Moving forward, a structural shortfall of available single-family homes as well as home builders' ability to bridge the affordability gap with price incentives should continue as tailwinds and support an improving sales pace this year.
The minor slip in new home sales stands in stark contrast to a surge in existing home sales during the same month. The discrepancy is likely owed to differences in the methodology behind each data series. New home sales are a snapshot of signed sales agreements whereas existing home sales data measures contract closings, which can lag by a month or two. As such, the marginal fall in new home sales may be presaging a near-term slowdown in buyer demand on account of worsening affordability conditions.
DOE Announces $6 Billion to Cut Emissions From Industrial Facilities
The Biden administration announced $6 billion in funding Monday for projects that will slash emissions from the industrial sector — the largest-ever U.S. investment to decarbonize domestic industry to fight climate change. The industrial sector is responsible for roughly 25% of all the nation’s emissions, and has proven difficult to decarbonize due to its energy-intense, large-scale operations. White House climate adviser Ali Zaidi said this funding aims to eliminate 14 million metric tons of pollution each year, equivalent to taking about three million cars off the road.
Iron, steel, aluminum, food and beverage, concrete and cement facilities are some of those involved in this initiative. Recipients of the funding, which is coming from the Inflation Reduction Act and the Bipartisan Infrastructure Law, include 33 demonstration projects in more than 20 states. Among the projects funded: Constellium in Ravenswood, West Virginia, is going to operate a first-of-its-kind zero-carbon aluminum casting plant and install low-emission furnaces that can use clean fuels such as hydrogen. Kraft Heinz will install heat pumps, electric heaters and electric boilers to decarbonize food production at 10 facilities, including in Holland, Michigan. Cleveland-Cliffs Steel Corporation in Middletown, Ohio, will retire one blast furnace, install two electric furnaces, and use hydrogen-based ironmaking technology.
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- US Abstains - UN Security Council Resolution Calls for Gaza Ceasefire - BBC
- Israel Cancels Visit to Washington After U.S. Abstains on U.N. Cease-Fire Resolution - WSJ
- What To Know About The Latest Israel-Hamas Hostage Deal - Forbes
- Israel Will Stop Working With UNRWA in Gaza, Government Spokesperson Says – Reuters
- Hostage Talks Stall as Israeli Defense Minister Arrives in Washington - WSJ
- Kamala Harris Warns Israel Against Invading Rafah—Macron Follows, Warning Of Possible ‘War Crime’ - Forbes
- UN Chief Urges Massive Gaza Aid Flow, Sees 'Dramatic Starvation' - Reuters
- 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
- Poland Demands Explanation from Russia After a Missile Enters its Airspace During Attack on Ukraine -AP
- Oil Prices Rise as Ukraine Strikes Russian Refineries - CNBC
- Vladimir Putin Begins Operation Blame Ukraine – The Economist
- Putin Says 'Radical Islamists' Behind Moscow Concert Hall Attack – France 24
- Zelensky Hits Back After Russia Links Ukraine to Moscow Attack - BBC
- Kyiv Endures a Third Bombardment in 5 days as Russia Steps Up Targeting of Ukrainian Cities - AP
- 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
- Japan And U.S. Will Deepen Military Ties As Tensions With China Rise - Forbes
- North Korea Says Japan’s PM Kishida Has Requested Summit With Kim Jong Un – France 24
- France to Mobilise More Soldiers for Anti-Terrorism Unit – Reuters
- Hundreds Protest in India Against Arrest of Leading Opposition Figure – France 24
- ‘Alarm Bells Are Ringing’: Poland’s President Says NATO Must Urgently Ramp Up Defense Spending - CNBC
- ‘A Ticking Time Bomb’: In Syrian Camps, Fears of an Islamic State Revival - WSJ
- France Raises Security Risk to Highest Level Months Before Olympics – The Hill
- Nigeria Stampede at Charity Cash Hand-Out Event Kills Seven in Bauchi - BBC
- Senegal Opposition's Faye Wins Presidential Election – Reuters
Policy and Politics
Stalemate Between Real Estate Industry, Unions Complicating NY Budget Talks
An ongoing stalemate between New York City real estate developers and building trade unions is complicating state budget negotiations in Albany, where Gov. Kathy Hochul and state lawmakers appear increasingly likely to blow past a key deadline without having a final spending plan in place. Hochul and legislative leaders are aiming to strike a deal on wide-ranging housing policies as part of a fiscal plan they hope could spur development that boosts the supply of available units and drives down rents. So far this year, housing talks have again struggled to get off the ground.
At issue is a key component of Hochul’s housing plan: the revival of an expired, long-term tax break for developers who build housing projects in New York City that include affordable units. It was previously known as 421-a, a reference to the section of the law where the tax break was found. Hochul punted a critical part of the negotiations to the Real Estate Board of New York — the industry’s biggest lobbying group — and labor unions in January, leaving it up to them to jointly devise a plan for determining the minimum amount workers must be paid on construction jobs that qualify for the tax break. They haven’t been able to reach a deal, throwing a wrench into the broader budget talks and casting significant doubt on whether the governor and lawmakers will be able to pass a spending plan ahead of the beginning of the state's fiscal year on April 1.
The $27 Trillion Treasury Market Is Only Getting Bigger
The world’s largest, most-important financial market is growing by leaps and bounds. On Wall Street, that is making people nervous. Annual issuance of U.S. Treasurys has exploded, nearly doubling since the pandemic began. The government sold a record $23 trillion worth in 2023. And few think the spree is going to slow soon, given the widespread expectation that government spending will continue to rise regardless of who wins November’s elections.
Rapid growth in markets from tech stocks to mortgage bonds has ended badly in the past. Treasurys are considered the safest and easiest-to-trade securities on Wall Street, and many worry that any instability there could rapidly spread. The market’s growth isn’t the only thing troubling investors: Some are also concerned about new rules that are changing the way the trading works. That could help alleviate strains but also create unforeseen consequences, such as the cash shortages in 2019 and 2020 that snarled trading and boosted interest rates.
Onondaga County Files Lawsuit Over New York's New Even-Year Election Law
Onondaga County on Friday officially filed a lawsuit against New York over the new state law that will move many local elections to line up with state and federal elections in even-numbered years. The Republican-controlled county legislature has made clear over the last few months its intention to challenge the new law, arguing it conflicts with the county's charter. Twenty New York counties are chartered, meaning they have a locally drafted and approved laws outlining the structure and authority of county government.
The law moves several local elections outside of New York City to even-numbered years, with the exception of some city or village elections, and races for county clerk, sheriff, district attorneys, local judges and others protected in the state Constitution. The state Legislature passed the legislation in June and Gov. Kathy Hochul signed it into law in December. Transitioning elections is scheduled to start in 2025. Advocates argue the change will boost voter turnout in local elections. They also say the state law includes language to supersede any county charter laws. Opponents have also voiced concern with local issues getting overshadowed by races at the top of the ballot.
Read more at NY State of Politics
Health and Wellness
AbbVie’s New ‘Biological Missile’ Ovarian Cancer Treatment Gets Full FDA Approval
The Food and Drug Administration said Friday it granted full approval to AbbVie and ImmunoGen’s cancer drug mirvetuximab-soravtansine-gynx, or Elahere, part of a new class of cancer treatments considered “biological missiles” because of their ability to precisely home in on cancer cells. The FDA granted an accelerated approval to the drug in 2022, but granted this full, traditional approval based on the results of a study completed in 2023 that found patients taking Elahere were 35% less likely to die or see tumor progression when taking the drug compared to other chemotherapies, and had lower rates of serious adverse events.
Elahere is now approved for patients with a specific type of cancer in the ovaries, fallopian tubes or peritoneum who have already received one to three prior treatment regimens, the FDA said. Patients with these cancers often undergo surgery and then receive platinum-based chemotherapy, but may become resistant to that treatment, requiring a new therapy like Elahere, AbbVie said in a press release.
Election 2024
- Biden and Trump Ask Voters if They’re ‘Better Off’ Than They Were 4 Years Ago. It’s Complicated - AP
- Haley Faces Questions About 2024 Role With Trump as GOP Nominee – The Hill
- They Hold the Key to Senate Control — But They’d Rather Talk About Montana and Ohio – Politico
- 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
Weak Demand Drags Global Steel Output
With Chinese steel output falling almost -7.0% from January, global steel production decreased by -6.0% in February at 148.8 million metric tons across 71 nations. The result is +3.7% higher than the February 2023 total and brings the 2024 year-to-date steel production volume to 306.9 million metric tons, which is +3.0% ahead of the two-month total for last year. The results are compiled by the World Steel Association, which noted the totals represent 98% of global raw-steel capacity. February results typically lag January totals due to the fewer number of working days, though in the current situation the overall demand for steel is affecting output too.
Steelmakers worldwide continue to face weak demand from their major consumer markets, compelling them to restrain their output levels. Recently, World Steel cited falling demand from industrial and construction markets for only minor growth in steel consumption. Activity in China, however, typically defines the global picture as producers there regularly melt and cast more than half of the world’s total output. In February, Chinese steelmakers produced an estimated 81.2 million metric tons of raw steel, -6.9% less than during January – though 3.5% more than recorded for February 2023. U.S. steelmakers’ 6.5 million metric tons of steel produced in February was -4.6% less than their January result, and -1.2% less than their February 2023 result.
Learn more at American Machinist
China Told it Faces 'Fork in the Toad' as Officials Meet CEOs
hina needs to "reinvent itself" with economic policies to speed resolution of its property market crisis and boost domestic consumption and productivity, the International Monetary Fund's Managing Director Kristalina Georgieva said on Sunday. China faces a fork in the road — rely on the policies that have worked in the past, or reinvent itself for a new era of high-quality growth," Georgieva said in remarks to a meeting of senior Chinese officials and executives from global companies. The IMF remarks were significant in coming at the outset of a two-day meeting where Beijing is looking to push the message China is open for business.
Foreign investment flows into China shrank nearly 20% in the first two months of the year, data released Friday showed, and officials have been stepping up efforts to attract investors at a time when many companies have been looking to "de-risk" supply chains and operations away from China. In 2023, foreign direct investment into China contracted by 8%, reflecting a shaky economic recovery and tensions with the United States and its allies on a range of issues.
Boeing CEO Dave Calhoun to Step Down
CEO Dave Calhoun will step down at the end of 2024 in part of a broad management shakeup for the embattled aerospace giant. Chairman of the board Larry Kellner is also resigning and will leave the board at Boeing’s annual meeting in May. He has been replaced as chair by Steve Mollenkopf, who has been a Boeing director since 2020. And Stan Deal, president and CEO of Boeing Commercial Airplanes, is leaving the company effective immediately. Moving into his job is Stephanie Pope, who recently became Boeing’s Chief Operating Officer after previously running Boeing Global Services.
The departures come as airlines and regulators have been increasing calls for major changes at the company after a host of quality and manufacturing flaws on Boeing planes. Calhoun for months has promised investors, airline customers and the general public that Boeing will get its myriad quality struggles under control. Calhoun was appointed to the top job in late 2019 and took the helm at Boeing in early 2020 after the company ousted its previous chief executive, Dennis Muilenburg, for his handling of the aftermath of two deadly 737 Max crashes.
Regeneron's Blood Cancer Therapy Faces Setback as FDA Raises Trial Concerns
Regeneron Pharmaceuticals said on Monday the U.S. FDA has declined approval for its blood cancer therapy for two forms of lymphoma on concerns over the progress of ongoing confirmatory trials. The FDA said in its response letter that it needs more data from enrollments in dose-finding and confirmatory portions of trials, delaying its decision on the drug, while confirming no issues with clinical efficacy or safety, trial design, labeling or manufacturing.
The company was testing its experimental drug, odronextamab, in multiple late-stage trials in patients with follicular lymphoma and diffuse large B-cell lymphoma, the two most common subtypes of non-Hodgkin lymphoma. Regeneron said "it was the first time" a CRL for this reason was issued by the U.S. Food and Drug Administration, which has been lately working to raise the bar for cancer drug developers seeking accelerated approval for their candidates. Such approvals allow the agency to move therapies that target serious and life-threatening conditions to the market more quickly, but have been criticized, opens new tab because some drugs have later been proven to be ineffective.
Tesla Supercharger NACS Access for Non-Tesla’s Clarified by Exec
Tesla executive Rohan Patel, Tesla’s Vice President of Public Policy and Business Development clarified some facts about Supercharger NACS access for non-Tesla vehicles like Rivian and Ford. Tesla recently opened the Supercharger Network to Ford and Rivian electric vehicles (EVs) through its NACS connecter. Both automakers claim that NACS connectors provide Ford and Rivian owners access to over 15,000 Tesla Supercharger locations. Teslavangelist pointed out that non-Tesla EV owners only have access to V3 and V4 Superchargers, doubting they have access to 15,000 Supercharger stalls.
Patel clarified that Rivian and Ford EV owners actually have access to 16,000 Supercharger stalls. He explained that around 11,000 Superchargers are exclusive to Tesla customers, most of which are V2 stalls. “Multiple stations being added every week, and really our only limiting factor is utility interconnection which takes too damn long,” posted Patel on X. Grok further explained that Tesla has more than 2,100 Supercharger stations and over 20,000 stalls in the United States. Rivian and Ford NACS users have access to a portion of those Superchargers. Rivian rolled out an infotainment update that helps owners find which Tesla Supercharger stalls are compatible with NACS connectors, making trip planning easier.
Oil Drifts Higher on Heightened Supply Concerns
Oil prices rose more than 1% on Monday as hostilities intensified between Russia and Ukraine and in the Middle East. Brent crude futures climbed $1.05, or 1.2%, to $86.48 a barrel by 1423 GMT while U.S. crude futures gained $1.15, or 1.4%, to $81.78. Both benchmarks have risen steadily this year, with Brent up nearly 11% and WTI about 12.5% by Friday's close. The upward trajectory is linked to belief that a sticky recession is being fought off, with interest rates in major economies expected to fall by the summer, while the OPEC+ group of oil producers has extended supply curbs into the second quarter.
Concerns over global oil supply are being heightened, meanwhile, by attacks on Russian energy facilities and Ukrainian energy infrastructure as well as fading hopes of a ceasefire in the Israel-Hamas conflict, said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
California Restaurants Cut Jobs as Fast-Food Wages Set to Rise
A California state law is set to raise fast-food workers’ wages in April to $20 an hour. Some restaurants there are already laying off staff and reducing hours for workers as they try to cut costs. California restaurants, particularly pizza joints, have outlined plans to cut hundreds of jobs in the months leading up to the April 1 wage mandate, according to state records. The coming minimum-wage increase for California fast-food workers at bigger chains represents a 25% increase from the state’s broader $16 minimum wage. McDonald’s, Chipotle Mexican Grill, Jack in the Box and other restaurant chains have said they would raise menu prices in California to offset some of the cost.
Many California restaurant operators are looking for other ways to cover the cost, like reducing hours, closing during slower parts of the day or serving menu items that take less time to make. Other restaurateurs, including Hom of Vitality Bowls, said they are turning down opportunities to open new locations in California and looking at expanding in other states instead. Proponents of the California law setting the new minimum food-worker wage and a state-appointed council overseeing it have said the measures would help improve the lives of hundreds of thousands of local workers.
Industrial Robots Can Reduce Injuries
An academic study, "Industrial robots, Workers' safety, and health" from 2022, that studied the relationship between the adoption of industrial robots and workers’ safety, health and well-being concludes robots in the plant can reduce injuries to workers. In the introduction the authors point out using robots for physically intense activities can “offer considerable safety benefits to human workers, as robots can help prevent injuries or adverse health effects resulting from working in hazardous conditions."
Using data from both the US and Germany, as leading adopters of robots, the authors reviewed detailed establishment-level data on work injuries from OSHA and the Data Initiative (ODI) covering the 2005 to 2011 period. They found that a one standard deviation increase in robot exposure (1.34 robots per 1000 workers) reduces work-related injury rates by approximately 1.2 injuries per 100 full-time workers. They estimated that the increase in robots saved $1.69 billion per year in injury costs (using 2007 dollars.). They explained this calculation. "This result largely reflects a reduction in injury rates at manufacturing firms which decline by 1.75 injuries per 100 full-time workers (or 0.22 standard deviations; 95% CI: −2.48, −1.02)."
Doctors Take Another Step Toward Animal-to-Human Organ Transplants With the First Pig Kidney Transplant
For the first time, doctors have transplanted a pig kidney into a living human patient. Researchers hope that one day, organs from non-human animals can help address the shortage of organs available for transplant. The patient, Richard Slayman of Massachusetts, received the experimental treatment because he was suffering from end-stage kidney failure. The four-hour surgery took place on March 16 at Massachusetts General Hospital, and Sleyman is recovering well and is expected to be discharged from the hospital soon, according to a statement from the hospital.
In this most recent procedure, researchers used CRISPR-Cas9 gene-editing technology to remove pig genes that provoke a negative response in humans and to add human genes that would make the kidney more compatible, according to a statement from the Harvard Medical School. They also inactivated pig viruses that could have infected the recipient and made 69 genomic edits in total. Similarly edited kidneys were used in last year’s study in monkeys. Slayman is also receiving drugs to prevent his immune system from attacking the kidney, per the medical school’s statement.
Read more at Smithsonian Magazine