Member Briefing March 6, 2023
US PMI: Manufacturing Activity Improves Slightly But Still Continues to Shrink
Manufacturing economic activity contracted for the fourth consecutive month, according to the Institute for Supply Management’s February 2023 manufacturing sector report. Results were better than in January, but the index remains mired in negative territory. After four months below 50%, the prices index figure climbed up 6.8 points to 51.3%, making its way into increasing territory.
The Purchasing Manager’s Index came in 0.3 points higher last month than the January report at 47.7%. Anything lower than 50% represents contraction. The new orders index, although 4.5 points higher than the January figure, kept its contractions status at 47%. The employment index fell 1.5 points into contraction territory, and the production index reading dropped 0.7 points compared to the previous month.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- From Javelins to Tanks: What $30 Billion in U.S. Military Aid to Ukraine Looks Like - WSJ
- Russians Pound Access Routes to Ukraine's Besieged Bakhmut - Reuters
- Experts Say Russia and China's Attempts to 'De-Dollarize' Global Markets are Going Nowhere - YahooFinance
- US Evaluating Ukrainian Pilots for Possible F-16 Training - CNN
- Ukrainian Forces, Under Renewed Russian Pressure, Seek to Reinforce Bakhmut - WSJ
- Russia's Foreign Minister Gets Laughed at Over Ukraine Remarks at a Global Conference - NPR
- Academic Fight Erupts Over Measuring the West’s Pressure on Russian Economy - WSJ
- Russia Set to Mothball Damaged Nord Stream Gas Pipelines – Sources - Reuters
- Russia's Wagner Boss Publishes Video Showing Coffins of Dead Ukrainian Troops Being Shipped Home - Reuters
- A Year Into the Ukraine war, the World's Biggest Democracy Still Won't Condemn Russia - NPR
- 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
China Sets Conservative Growth Target as Challenges Loom
China’s target of around 5% growth this year in gross domestic product, announced on Sunday by Premier Li Keqiang at the start of the country’s annual legislative session is the lowest growth target in more than a quarter-century and suggests that officials are less concerned about raw economic expansion as they turn their attention to other priorities. At this week’s legislative meetings, leader Xi Jinping is expected to further consolidate his grip over the realms of security, finance and technology, reshuffling key posts to further dilute the government’s role in policy-making at the expense of the Communist Party, The Wall Street Journal has reported.
This year’s growth target was more conservative than the roughly 5.5% goal set by Beijing last year—a target that the world’s second-largest economy missed by a wide margin, held back by Mr. Xi’s stringent Covid controls and a prolonged property slump. Last year’s 3% growth rate was the slowest in decades, with the exception of Covid-plagued 2020, when officials dropped its target altogether.
President Zelenskyy Addresses US Manufacturers at NAM Board Meeting
President Zelenskyy of Ukraine spoke live via video to the members of the NAM’s Board of Directors during its meeting last Tuesday. In his speech, President Zelenskyy declared that “Ukraine is indeed the place where democracy will defeat tyranny. The united democracy: Ukrainian, American, all our allies and partners.” And he called on American business to invest in Ukraine now, saying, “I urge you to prepare for these victories now, to come to Ukraine now so that by the time we restore peace, your hard work has already yielded results.”
NAM President Jay Timmons said “President Zelenskyy’s courage over the past year has been a powerful reminder that the Ukrainian people are not just in a fight for their country. They are indeed fighting for freedom and democracy. Their fight is our fight. The NAM looks forward to working with you as we support the Ukrainian people during this brutal war and as they rebuild their country after Russia’s ultimate defeat.”
US COVID – Declining Cases, Hospitalizations, Mortality
The US CDC is reporting:
- 103 million cumulative cases
- 1 million deaths
- 236,131 cases week of February 22 (down from previous week)
- 2,407 deaths week of February 22 (down from previous week)
- 5% weekly decrease in new hospital admissions
- 3% weekly decrease in current hospitalizations
The Omicron sublineages XBB.1.5 (85%), BQ.1.1 (9%), and BQ.1 (3%) currently account for a majority of all new sequenced specimens, with various other Omicron subvariants accounting for the remainder of cases.
NYS COVID Update – Declining Cases
The Governor updated COVID data through February 24.
- Daily: 10
- Total Reported to CDC: 78,701
- Patients Currently in Hospital statewide: 1,696
- Patients Currently in ICU Statewide: 187
7 Day Average Positivity Rate - Cases per 100K population
- Statewide 3.09% - 7.49 positive cases per 100,00 population
- Mid-Hudson: 2.09% - 7.02 positive cases per 100,00 population
Senate Votes to Declassify Information on COVID Origins, the White House Won’t Say if Biden Supports the Bill
The Senate passed a bill by unanimous consent on Wednesday to require the director of national intelligence to declassify information related to the origins of COVID-19, following The Wall Street Journal report on Sunday that the Energy Department now says the pandemic most likely started from a lab leak (a decision it made with “low confidence”). Some members in the House have also called for this declassification.
When asked on Thursday if the president would sign the bill if the House passed it, National Security Council spokesperson John Kirby said he wouldn’t get ahead of the president’s decision. The House Select Subcommittee on the Coronavirus Pandemic will have its first hearing on the origins of COVID on March 8, the panel announced this week. Dr. Robert Redfield, director of the Centers for Disease Control and Prevention under the Trump administration, is among the witnesses scheduled to testify.
Robert Megna Returns as Budget Director for Governor Hochul
Robert Megna has served two governors as the top official at the state Division of Budget. He'll now be serving a third. Megna, a longtime fixture in New York state government, will serve as Gov. Kathy Hochul's budget director, her office on Monday announced. Hochul indicated the move will be a short-term one for Megna, who is currently the president of the Rockefeller Institute of Government and senior advisor to the chancellor of the State University of New York.
Hochul is turning to Megna with one month to go before the state budget is expected to pass on April 1. Megna has previously served as budget director for Gov. David Paterson and Gov. Andrew Cuomo. He has also served as the commissioner of the Department of Taxation and Finance and the executive director of the New York State Thruway Authority. Megna replaces Robert Mujica, a holdover from Cuomo's time in office, who departed to become a financial official for Puerto Rico.
iPhone Supplier Foxconn Will Build a Factory in India, Moving Away from China
Foxconn, one of Apple’s largest suppliers and a major manufacturer of iPhone components, will invest about $700 million to build a new plant in India’s Karnataka state, Bloomberg reported Friday. The report comes as U.S. companies continue to reevaluate their reliance on China in the wake of mounting tension between the U.S. and the Chinese government.
Bloomberg, citing people familiar with the matter, said Foxconn will build an iPhone parts plant on a 300-acre site near Bengaluru’s Kempegowda International Airport. Bengaluru, also known as Bangalore, is the capital of Karnataka state, which lies on the southwestern coast of India and has one of the highest per-capita GDP levels of any Indian state.Government officials confirmed Bloomberg’s reporting on Friday, writing that the new plant would create 100,000 jobs. The effort will be one of the largest investments by Foxconn in India, Bloomberg reported.
China's Factory Growth in a Decade
China's manufacturing activity expanded at the fastest pace in more than a decade in February, an official index showed on Wednesday, smashing expectations as production zoomed after the lifting of COVID-19 restrictions late last year. The manufacturing purchasing managers' index (PMI) shot up to 52.6 from 50.1 in January, according to China's National Bureau of Statistics. The PMI far exceeded an analyst forecast of 50.5 and was the highest reading since April 2012.
"The high PMI readings partly reflect the economy's weak starting point coming into this year and are likely to drop back before long as the pace of the recovery slows," said Julian Evans-Pritchard, head of China economics at Capital Economics.
National Cybersecurity Strategy Calls for Software Liability, Tighter Critical Infrastructure Security
The Biden-Harris administration last week announced a sweeping new National Cybersecurity Strategy that, among other things, seeks to establish meaningful liability for software products and services and sets mandatory minimum cybersecurity requirements in the critical infrastructure sector.
The strategy seeks to build collaboration and momentum around five specific areas: critical infrastructure protection, disruption of threat actor operations and infrastructure, promoting better security among software vendors and organizations handling individual data, investments in more resilient technologies, and international cooperation on cybersecurity. Of these, the proposed initiatives around critical infrastructure security and shifting liability to software vendors and data processors could have the most significant impact.
Mixed Bag: Euro Zone Factory Output Grew in February but Overall Activity Declined - PMI
Overall activity in the euro zone's manufacturing sector contracted again in February but output increased for the first time since May as supply chains continued to heal, a survey showed on Wednesday. S&P Global's final manufacturing Purchasing Managers' Index (PMI) dipped to 48.5 in February from January's 48.8, in line with a preliminary reading but still below the 50 mark separating growth from contraction.
However, an index measuring output, which feeds into a composite PMI due on Friday that is seen as a good guide to overall economic health, was just above breakeven at 50.1 compared to January's reading of 48.9. "A marginal expansion of output reported by euro zone manufacturers in February is welcome news in representing the first increase since last May and a further improvement in the underlying trend from the low seen back in October," said Chris Williamson, chief business economist at S&P Global.
U.S. Jobless Claims Ticked Down Last Week
Initial jobless claims, a proxy for layoffs, decreased by 2,000 to a seasonally adjusted 190,000 last week, the Labor Department said Thursday. Weekly claims have remained below the 2019 prepandemic average of about 220,000 since the start of the year. The four-week moving average of weekly claims, which smooths out volatility, rose slightly to 193,000. The number of Americans filing new claims points to sustained labor market strength and adding to financial market fears that the Federal Reserve could keep hiking interest rates for longer.
Thursday’s report showed continuing claims, a proxy for the total number of ongoing unemployment benefits payments, decreased by 5,000 to 1.655 million in the week ended Feb. 18. Continuing claims are reported with a one-week lag. The level of continuing claims is somewhat elevated from a low point of about 1.3 million last spring. Modestly elevated continuing claims could be a sign some beneficiaries are taking longer to find new jobs.
Lilly Cuts Insulin Prices by 70% and Caps Patient Insulin Out-of-Pocket Costs at $35 Per Month
Eli Lilly and Company (NYSE: LLY) today announced price reductions of 70% for its most commonly prescribed insulins and an expansion of its Insulin Value Program that caps patient out-of-pocket costs at $35 or less per month. Lilly is taking these actions to make it easier to access Lilly insulin and help Americans who may have difficulty navigating a complex healthcare system that may keep them from getting affordable insulin.
Today, Lilly is reducing the list price of insulins by: Cutting the list price of its non-branded insulin, Insulin Lispro Injection 100 units/mL, to $25 a vial. In addition to reducing the list price of its insulins, Lilly is also making it easier for more people with diabetes to get Lilly insulins. Effective immediately, Lilly will automatically cap out-of-pocket costs at $35 at participating retail pharmacies for people with commercial insurance using Lilly insulin. People who don't have insurance can continue to go to InsulinAffordability.com and immediately download the Lilly Insulin Value Program savings card to receive Lilly insulins for $35 per month.
New Drugs Could Spell an End to the World’s Obesity Epidemic
Treatments for weight loss have long ranged from the well-meaning and ineffective to the downright dodgy. The new class of drugs, called glp-1 receptor agonists, seems actually to work. Semaglutide, developed by Novo Nordisk has been shown in clinical trials to lead to weight loss of about 15%. It is already being sold under the brand name Wegovy in America, Denmark and Norway and will soon be available in other countries; Ozempic, a lower-dose version, is a diabetes drug that is also being used “off label” for weight loss. A rival glp-1 drug, made by Eli Lilly is due to come on sale later this year and is more effective still. Analysts think the market for glp-1 drugs could reach $150bn by 2031, not far off the market for cancer drugs today. Some think they could become as common as beta blockers or statins.
The drugs could not have arrived at a better time. In 2020 two-fifths of the world’s population were overweight or obese. By 2035, says the World Obesity Federation, an ngo, that figure could swell to more than half, with a staggering 4bn people overweight or obese.
UAE debating OPEC exit
Oil prices slumped on Friday after the Wall Street Journal reported that the United Arab Emirates had an internal debate about leaving OPEC and pumping more oil, but retraced some losses after a source told Reuters this was not true. A source with direct knowledge of the matter told Reuters the report that the United Arab Emirates is considering leaving the Organization of the Petroleum Exporting Countries is "far from the truth."
Oil prices this week had been boosted by strong Chinese economic data, underpinning hopes for oil demand growth, but those gains were all but erased on Friday.
How Would Micron’s Electricity-Hogging Syracuse Plant Live with NY’s CLCPA?
Micron Technology’s planned semiconductor fabrication plant in Clay would consume more electricity than the entire state of Vermont. When fully built, the complex of four chip fabs would use 640 million kilowatt-hours a month, more than enough for 1 million average New York homes. Micron has promised to buy all that electricity from renewable sources, a promise that reflects New York state’s commitment to have an emission-free electric grid by 2040.
Micron announced in October that it planned to invest up to $100 billion building four giant chip fabs at a 1,400-acre site in Clay. The fabs would employ up to 9,000 people directly and could spin off 40,000 more jobs, state officials said. The development won’t happen all at once. Micron said it plans to start producing chips in 2026 and will fully build the complex within 20 years. That timeframe coincides with what state officials hope will be a wholesale transformation of the energy sector.