Member Briefing May 9, 2024
IMF Chief Calls U.S. Debt Load ‘Mind Boggling,’ at Milken Conference
International Monetary Fund Managing Director Kristalina Georgieva praised the strength of the U.S. economy but warned its current level of deficit spending was not sustainable and could crimp U.S. and global growth if it’s not brought under control, in remarks Monday at the Milken Institute Global Conference. Servicing the U.S debt — now roughly $34 trillion — consumes more than 17% of federal revenue, compared to under 7% in 2015, Georgieva said in an interview that kicked off the annual conference at the Beverly Hilton, which draws thousands of businesspeople, investors and professionals from around the world.
Georgieva said the U.S. needs to address its entitlement spending but said its economy is strong and remains a pillar of the world economy given its innovation, strong labor market and position as an energy exporter. She also said she did not believe that the trend toward deglobalization was leading to the disintegration of the global economy, but warned that trade sanctions and industrial policies taken by many nations will only lead to lower growth rates — with the primary question being how much.
US Chip Manufacturing Capacity Projected to Triple by 2032 - Industry leader
US chip manufacturing capacity is projected to triple by 2032, according to a new report published by the Semiconductor Industry Association (SIA), signaling progress nearly two years after President Biden signed the CHIPS and Science Act into law. That increase is expected to grow the US's share of global semiconductor production to 14% by 2032 from 10% today, marking growth in the country’s manufacturing footprint for the first time in decades, according to the SIA. The report card, conducted in partnership with Boston Consulting Group, comes amid a global push to expand chipmaking capacity to address growing demand, particularly in advanced semiconductors used for artificial intelligence.
The US has maintained its lead in chip design and research and development, led by companies like Intel (INTC) and Nvidia (NVDA), but it manufactures just 10% of the global chip supply. Meanwhile, 100% of all advanced chips are developed overseas, mostly by TSMC (TSM) in Taiwan. US subsidies have set off a type of global race to incentivize chip manufacturing. Europe is attempting to attract fab development with its own $47 billion package. Japan has pushed to reclaim its position as a semiconductor powerhouse by extending $17.5 billion in grants to industry leaders, including TSMC and Micron (MU). And China, largely limited by US export controls, has looked to build out its own chipmaking capabilities with more than $150 billion in investments.
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- Netanyahu Weighs Risks of Rafah Assault as Hostage Dilemma Divides Israelis – Reuters
- Israel Tank Unit Takes Control of Gaza Side of Rafah Border Crossing as Netanyahu Rejects Cease-Fire Proposal – CBS News
- White House Optimistic Israel And Hamas Can Reach Cease-Fire Deal - Forbes
- US Report on Israel’s Wartime Conduct in Gaza Delayed, Aides Say – Politico
- The US Pauses Some Arms Supplies to Israel as Battles Rage Around Rafah - Reuters
- White House Halted Precision Bomb Shipments To Israel Over Concerns About Rafah Invasion - Forbes
- Israeli Forces Clash With Hamas in Eastern Rafah as Humanitarian Crisis Deepens - WSJ
- 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
- 5 Things to Know About Putin’s Inauguration – Politico
- EU Agrees €3B Raid on Russian Assets to Buy Weapons for Ukraine – Reuters
- Putin’s a ‘Nazi,’ Zelenskyy Says as Russia Intensifies Attacks on Energy Grid Ahead of Victory Day – Politico
- Israeli Officials Weigh Sharing Power With Arab States in Postwar Gaza – Irish Times
- Speeding Toward Ukrainian Lines On Two Wheels, Russia’s Motorcycle Troops Got ‘Beaten In The Teeth’ – Forbes
- Ukraine Hopes to Finalize Security Deal With the US This Month – 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
- US Popularity Shrinks Worldwide, New Report Says – Politico
- Modi Votes as Mammoth Indian Elections Reach Half-Way Mark – France 24
- Biden Administration Reportedly Blocks Export Of Intel And Qualcomm’s Chips To Huawei - Forbes
- BOJ Will Raise Interest Rates if Inflation Meets Forecast, Governor Ueda Says – Reuters
- Haiti Police Desperately in Need of Help as Battle Against Gangs Escalates – Irish Times
- Philippines First, India Later, as U.S. Prioritizes 'Squad' Allies – Nikkei Asia
- Dozens Detained as Paris Police Clear Gaza War Protest at Sorbonne University – France 24
- South Africa Election: Who Are ANC and Other Rival Parties Vying for Power? – Reuters
- Survey Finds Growing Partisan Divisions on US Views of NATO, Ukraine – The Hill
Policy and Politics
4 Takeaways on Biden’s Massive Spending Plans
POLITICO’s monthslong examination of Biden’s four biggest legislative achievements found that they have spurred action across the government, including a stream of announcements by federal agencies and private companies about plans to deploy billions of dollars. But the actual federal spending to date is considerably smaller than the amounts Biden and his agency heads have announced. Much of the country has yet to feel the full impact of this money, in part because of the time it takes to move so much spending through the machinery of government.
According to Politico less than 17 percent of the money Congress approved has been spent so far. The Administration loves and announcement - as of April, the announcements have totaled more than $543 billion, or half of the full value of what Congress appropriated. But an announcement doesn’t necessarily mean the money will flow quickly — or that the announced recipient will ever see it. Agencies typically announce tentative awards after identifying a recipient and a funding amount, but the awards could still be under negotiation, and either side might back out. Similarly, changing market conditions or worries about federal policy have prompted some companies to cancel or delay major electric vehicle, battery, solar and wind projects.
House Votes to Block Greene’s Effort to Oust Johnson from Speakership
The House voted swiftly Wednesday evening to kill Republican Rep. Marjorie Taylor Greene’s effort to oust Speaker Mike Johnson from his leadership post. The resounding vote in Johnson’s favor – which came with the help of Democrats – brings to an end the most serious challenge to the speakership the Louisiana Republican has faced, at least for now. The House on Wednesday voted to table – or kill – Greene’s push to remove Johnson by a tally of 359 to 43. Eleven Republicans voted against tabling.
In the wake of Johnson’s push to pass a major foreign aid package over the objections of hardline conservatives, House Democratic leadership had announced that Democrats would help Johnson keep his job by voting to table. As he navigates a razor-thin majority, the failed ouster effort gives Johnson the opportunity to argue it is time to move on to other issues, though support from Democrats may open him up to more criticism from his right flank.
TikTok Files Lawsuit Challenging Ban In The U.S
TikTok filed a lawsuit Tuesday challenging a new bill requiring ByteDance—the company’s China-based owner—to sell the app or face a ban in the U.S., claiming the law likely violates the First Amendment while arguing a nine-month timeline for a possible sale is “simply not possible.” TikTok said the law, signed by President Joe Biden last month, will force a shutdown of TikTok by Jan. 19, 2025, while “silencing the 170 million Americans who use the platform to communicate in ways that cannot be replicated elsewhere,” according to the lawsuit.
The company argued “there is no choice” except for TikTok to be banned in the U.S., suggesting a 270-day timeline for ByteDance’s required divestment is “simply not possible: not commercially, not technologically, not legally.” If ByteDance could feasibly divest from TikTok, the law still presents an “extraordinary and unconstitutional assertion of power” and denies the company equal protection under U.S. law, TikTok alleges. The company also argued it would be “impossible” to move the app’s code to a new owner, adding it would take years for new engineers to gain “sufficient familiarity” with its source code to perform necessary maintenance and other development activities.
US Lawmakers Urgently Add Amendments As Critical FAA Bill Deadline Approaches
Senators are racing to ensure that the latest 1,089-page reauthorization bill for the Federal Aviation Administration (FAA) remains on track amid dozens of new amendments that could derail the bipartisan legislation. The extensive bill is set to address the nation's massive shortage of air traffic controllers and implement new safety technology that could assist in reducing runway collisions, among other provisions.
With the current temporary FAA authorization bill set to expire this Friday, May 10th, legislators are racing to get the new bill up for a vote as quickly as possible. Nonetheless, many new amendments could make what once proved a noncontroversial bipartisan regulatory provision subject to discussion. This legislation remains one of the last must-pass items on the Senate's docket before September, as it is one of the most important bills to be approved for the organization to have its priorities in line over the summer. The bill cleared procedural stages over the weekend but has yet to come up for a vote, with lawmakers scheduled to resume their progress on the morning of Tuesday, May 7th.
Health and Wellness
COVID FLiRT Variants Begin to Circulate – What We Know
A new set of COVID-19 variants, nicknamed FLiRT, has been detected in wastewater surveillance, according to data from the Centers for Disease Control and Prevention. From April 14 through April 27, the variant, labeled KP.2, makes up about 25% of the cases in the United States, according to the CDC. That makes it the new dominant variant in the country, overtaking JN.1. The JN.1 variant, which spread globally over the winter, made up 22% of COVID-19 cases in the U.S. in the same two-week span. KP.1.1, another FLiRT variant that is circulating, made up about 7.5% of COVID-19 cases in that two-week span, according to CDC data.
Megan L. Ranney, dean of the Yale School of Public Health, told WebMD that FLiRT has some concerning features, like changes in the spike protein, which play a role in helping SARS-CoV-2 colonize the body and make people sick. “We’ve got a population of people with waning immunity, which increases our susceptibility to a wave,” Thomas A. Russo, chief of infectious disease at the Jacobs School of Medicine and Biomedical Sciences at the University of Buffalo, told WebMD.
Read more and see the Symptoms at USA Today
Election 2024
- 5 Twists That Could Shake up the Election Before November - The Hill
- Who Will Be Trump’s Running Mate? – The Dispatch
- Judge Postpones Trump’s Classified Documents Case Indefinitely - Forbes
- On Campus and in Gaza, Chaos Threatens Biden’s Campaign - WSJ
- 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
Key Bridge: Sixth Body Recovered, Bridge Removal Continues
Officials said Unified Command salvage teams located the victim Tuesday and notified Maryland State Police. Investigators identified the victim as the sixth construction worker presumed killed in the collape, José Mynor López, 37, of Baltimore. Gov. Wes Moore released a statement on the discovery. "We pray for José Mynor López, his family, and all those who love him. It is with solemn relief that he will be reunited with his loved ones, and we ask, again, to respect the family’s request for privacy during this difficult time.
Meanwhile, the Key Bridge Response Unified Command is scheduled to use precision cuts made with small charges to remove a large section of the Francis Scott Key Bridge wreckage from on top of the DALI. The exact time of the precision cuts will depend on multiple environmental and operational factors, officials say. The small charges, a standard controlled demolition tool, will split the large section of truss at specific locations to create multiple, smaller sections, which allows salvors to use cranes and barges already on scene to remove these sections of the bridge and ultimately remove the DALI from the channel.
Read more at Fox News Baltimore
They Started Hand-Sanitizer Businesses During Covid. How Are They Doing Now?
During the pandemic, hand sanitizers became everyone’s front-line defense—and countless startups launched to meet the overwhelming demand. Then the demand wasn’t so overwhelming anymore. According to research company Statista, the global hand-sanitizer market boomed by 500% in 2020 to $6.3 billion in revenue from $1.03 billion in 2019. But as the pandemic subsided, so did sales: $3.5 billion in 2021, and hovering around $3 billion for the next couple of years.
So, what happened to all those startups? Here’s a look at three of them.
Toyota Issues Cautious Forecast After Record Profit, Scandal
Toyota Motor Corp. on Wednesday said surging sales and higher margins had seen it almost double its profits in its fiscal fourth quarter, but warned its profits will slump over the coming year as it deals with fallout from the scandal surrounding its Asia-focused car brand Daihatsu. Toyota Motor Corp, the world’s largest carmaker by sales, beat expectations in posting an 81% increase in its fourth-quarter profits, to ¥1,015.8 billion ($6.54 billion), compared to the ¥755 billion predicted by analysts, Visible Alpha data shows.
The Japanese automobile company sold 7% more of its Toyota and Lexus vehicles, with electric vehicles — including hybrid vehicles — accounting for 37.4% of group-wide sales. In 2024, sales of hybrid electric vehicles accounted for 93% of the 3.86 million electric vehicles Toyota sold throughout the financial year. Toyota’s sales, meanwhile, fell by 25% in Japan — despite increasing in all other regions — as its domestic business was hit by the carmaker’s decision to suspend all shipments of Daihatsu vehicles last December. Daihatsu, which mainly makes small cars sold in Japan and emerging Asian markets, shuttered all of its carmaking factories late last year, following revelations the company forged side-collision data for 88,000 vehicles.
BMW Sees Net Income Slump
German carmaker Bayerische Motoren Werke reported a 19.4% drop in its net profit, to €2.95 billion ($3.17 billion), as falling sales of its motorcycles and Mini and Rolls Royce cars offset a 2.5% increase in sales of the BMW vehicles which account for the vast majority of its group-wide sales. The German carmaker’s margins fell from heights of 12.1% in the first quarter of 2023, to 8.8% in the first three months of 2024, as an “inflation-related increase in manufacturing costs” hit the company’s profitability.
BMW’s falling sales were partially offset by a 28% increase in sales of its battery electric vehicles, driven by a 40.6% increase in sales of fully-electric BMWs. This increase saw sales of electric vehicles account for 13.9% of group wide sales in the first three months of 2024, compared to 11% of sales in the first quarter of 2023. The Munich headquartered company, nonetheless, held its outlook for the full-year 2024, as it said it expects to benefit from a “slight increase” in global economic growth that it expects will boost demand for its cars.
Airbus Buys U.S. Drone Developer
Airbus Helicopters completed its purchase of Aerovel, developer of an unmanned vertical takeoff and landing system used for tactical missions. No price has been reported for the acquisition of the company and its Flexrotor compact drone unit designed for intelligence, surveillance, target acquisition and reconnaissance (ISTAR) missions at sea and over land. Aerovel CEO Ali Dian said the takeover the company to scale up innovation to support the U.S. and allied nations’ defense programs. The 30-employee firm will continue to design and manufacture the Flexrotor at Bingen, Washington.
When the acquisition was announced earlier this year Airbus Helicopters CEO Bruno Even said Aerovel's expertise in autonomous flight technology will “complement our UAS development with the VSR700” – an unmanned aerial system (UAS) currently under development for naval tactical use, and search and rescue – “and bring to bear a highly capable autonomous platform in times of heightened threats. as well as the work that we have been doing to develop interoperability.”
Read more at American Machinist
Northrop Wins $7B Upkeep Contract for B-2 Bomber
The U.S. Dept of Defense issued a five-year contract worth up to $7 billion to Northrop Grumman Systems Corp. for modernization and sustainment activities for the B-2 Spirit stealth bomber fleet. The indefinite-delivery/indefinite-quantity contract covers “enhancements, sustainment, logistics elements including sustaining engineering, software maintenance, and support equipment” for the B-2 program through May 3, 2029.
The B-2 Spirit, aka the Stealth bomber, is an intercontinental, subsonic flying-wing aircraft outfitted with stealth capability and designed by Northrop to penetrate anti-aircraft defenses. Over the 13 years it was in production, the B-2 gained unwanted attention for its extraordinary cost, as well as for the secrecy of the design. Production of new B-2 aircraft ended in 2020, and the USAF reportedly will retire the program in the early part of the next decade. Along with the Boeing B-1 Lancer bomber, the B-2 aircraft would be replaced with the Northrop Grumman B-21 Raider, in development now as part of the Air Force’s Long Range Strike Bomber program. The USAF has said that new aircraft would go into production in the 2030s, and enter into service by 2040.
Read more at American Machinist
UAW’s Battle for the South Picks Up Steam
The vote was expected to be close, but it wasn’t. Last month, manufacturing workers at the Volkswagen Chattanooga Plant in Tennessee said “yes” to joining the United Autoworkers Union. Of the votes cast, 73% were in favor of unionizing. It was an especially satisfying victory for the UAW after two failed union elections at the plant, in 2014 and 2019.The victory also further lifted the union’s profile and psyche. The UAW had never before succeeded in unionizing a foreign automaker’s U.S. operations. It’s no accident that most of these automakers—VW, BMW, Hyundai, Nissan, Mercedes—located their U.S. headquarters in union-averse southern states. The few unionized automaker plants in the South belong to Ford and General Motors.
“The stakes are even higher for the UAW in Alabama than in Tennessee,” said Stephen Silvia, a professor at American University and author of “The UAW’s Southern Gamble,” an examination of the union’s efforts to organize southern workers over time. Silvia sees four reasons why the UAW succeeded in Chattanooga where it had failed before.
Companies Are Balking at the High Costs of Running Electric Trucks
Executives at truck leasing company Ryder System spent years listening to some of their biggest customers say they wanted to switch to battery-electric big rigs. Now that the heavy-duty trucks are available, the company says, few customers want to pay for them. “The economics just don’t work for most companies,” said Robert Sanchez, the chief executive of Ryder, which manages 250,000 trucks and vans for tens of thousands of retailers and manufacturers.
Battery-electric trucks cost about three times as much to purchase as a diesel rig. There are federal and state programs to help offset the purchase costs, but operating costs and other issues present big hurdles. Truckers say battery-electric truck operations are too difficult to set up and too expensive and inefficient to run. It can take years to install on-site charging facilities for trucks that can travel less than half as far as diesel rigs between refueling and that require at least several hours to recharge.
Bucking the Trend: Two Companies Institute 6-Day Work Weeks for Execs
Samsung and SK Group are under fire for implementing a six-day work week for their executives, according to The Korea Times. The move has been criticized for its potential negative impact on morale and adherence to outdated labor standards. Industry insiders and experts have questioned the decision, questioning its compatibility with contemporary workplace norms.
Executives at Samsung Group’s key affiliates, including Samsung Electronics, Samsung SDI, and Samsung SDS, are now required to work an additional day, either on Saturday or Sunday. While framed as a measure to enhance risk management amidst global economic uncertainties, the initiative has raised concerns about its broader implications for employee wellbeing. SK Group has similarly reinstated biweekly Saturday meetings for top executives from its affiliates, a practice abandoned for 24 years since the adoption of the five-day work week in 2000. Combined with Samsung’s decision, this move has raised questions about the direction of corporate culture and working conditions.