Member Briefing November 13, 2023
Global PMI Data Show Prices Rising At Slowest Rate Since December 2020
Global inflationary pressures moderated in October to their lowest since late-2020, according to PMI® data compiled by S&P Global across over 40 economies and sponsored by JPMorgan. Average prices charged for goods and services rose globally at the slowest rate for nearly three years in October. The global PMI selling price index - compiled by S&P Global and covering prices charged for both goods and services in all major developed and emerging markets - fell from 53.6 in September to 53.0 in October, its lowest since December 2020.
The further decline in the selling price index from its all-time high recorded in April 2022 brings global inflationary pressures closer to the survey's long run average of 52.2 (and closer to the five-year pre-pandemic five-year average of 51.6). The leading-indicator properties of the PMI mean that global inflation is set to cool further from the 5.0% annual rate estimated from various national sources for July, potentially dropping to around 3.5% early in the new year. Although a 3.5% rate remains somewhat elevated by historical standards (in the decade prior to the pandemic, global CPI inflation averaged 2.7%), there are good reasons to believe underlying price pressures will continue to moderate even further in the months ahead.
War in Israel Headlines
- Israel and Hamas: The Latest News – The Guardian
- EU Weighs Sanctions Against Iran Over Israel-Hamas War - Politico
- 9 Americans Still Missing After Hamas Attack as Hostage Negotiations Continue – ABC News
- Israel Races to Root Out Hamas as Calls for Gaza Cease-Fire Mount - WSJ
- Hamas Envisioned Deeper Attacks, Aiming to Provoke an Israeli War – Washington Post
- Israel-Hamas War Hits Airlines In The Region Hard – Aviation News
- IDF Claims it Killed Hamas Commander Who Held Hospital Patients Hostage – The Hill
- Calls for Gaza Cease-Fire Divide Europe’s Socialists – Politico
- Hamas Offered Israel 50 Hostages for a 5-day Cease-Fire but the Deal Got Rejected, Reports Say - Insider
- More Than 180,000 People Across France March Against Soaring Antisemitism Amid the Israel-Hamas War - AP
- Israel-Hamas War in Gaza: What is the History of the Conflict? – Reuters
- Map – Tracking Hamas’ Attack on Israel – Live Universal Awareness Map
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Ukraine War Slips Toward Violent Stalemate - WSJ
- Russia's Putin Meets Military Top Brass to Discuss Ukraine War – Reuters
- Putin Wants the West to Forget About Ukraine – The Atlantic
- Russian Forces ‘Trying to Surround’ East Ukraine Stronghold - CNBC
- One Year After Liberation, Ukrainians in Kherson Hold on to Hope Amid Constant Shelling - Politico
- Private Jets of Russian Oligarchs Keep Flying But Not to Europe - Reuters
- Blacklisted Russian Grain Operator to Establish Dry Cargo Fleet -Lloyd’s List
- Ukraine Attacks More Russian Landing Craft in Crimea, Crippling Naval Landing Operations - Yahoo
- Russia Adds More Than 3tn Roubles to its Budget – Financial Times
- 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, U.S. Confirm Biden and Xi Jinping Will Meet in San Francisco
The U.S. and China made it official, announcing Friday that President Biden and Chinese leader Xi Jinping will meet next week for a summit that both powers say they want to keep their sprawling rivalry in check. In confirming the much-anticipated meeting, senior Biden administration officials previewed a lengthy agenda of trouble spots they expect to come up, including the Israel-Hamas war, North Korea and China’s backing of Russia during its war on Ukraine.
For substantive outcomes, the U.S. and China look close to reaching agreements on key Biden asks, though the administration officials declined to confirm any progress. Both sides have in recent weeks moved closer to resuming contacts between their militaries, with the Pentagon accusing China of making dangerous intercepts of U.S. and allied craft to push them out of the region. The U.S. is also seeking Beijing’s help in choking off exports of chemicals shipped to Mexico where they are used by drug cartels to make fentanyl.
Consumer Sentiment Drops Again in November, Inflation Expectations Climb
The University of Michigan's Consumer Sentiment Index fell to 60.4 in November (chart). That marks the lowest point for sentiment since May, and it was lower than any of the 50 economists who submitted a forecast on Bloomberg. It is worth pointing out that the sky is not falling here. Current and expected finances both improved during the month amid a still steady labor market and a sharp upturn in equity markets since recent lows in October.
The bummed-out vibe can be attributed to the fact that consumers are waking up to the reality of a much higher interest rate environment and renewed concerns about inflation. The 5-10 year inflation expectations number climbed to 3.2% in Friday's release, that is the highest inflation expectations since 2011 when oil prices were north of $100/barrel and when gas prices were nearing $4/ gallon. Year ahead inflation expectations also spiked after a brief reprieve the past several months, jumping 0.2 percentage points to 4.4% in November, the highest since April.
COVID Update – China CDC's Chief Epidemiologist Wu Zunyou Dies at Age 60
Wu Zunyou, an epidemiologist who helped drive the country’s strict zero-COVID measures in China that suspended access to cities and confined millions to their homes, died on Oct. 27. He was 60. Wu's health had been poor. He disappeared from the public eye for months last year while battling cancer. Wu, who earned his master’s and doctorate from the University of California, Los Angeles, had spent much of his early career working on HIV/Aids prevention in China.
as China battled the COVID-19 virus, Wu came to be criticized by some for his choice to publicly voice support for the country’s strict virus control measures even as the weaknesses of the strategy became more pronounced. “Dynamic zero-COVID is appropriate for China’s reality, and is the best choice to control our country’s current COVID situation,” he said in April 2022, during the height of Shanghai’s lockdown. The strategy bought China time in the early days of the pandemic, but by 2022, as the virus became more and more easily spread, it showed signs of strain.
Read more at the Roswell Daily Record
NYS COVID Update
The Governor updated COVID data for the week ending November 10th.
Deaths:
- Weekly: 71
- Total Reported to CDC: 80,933
Hospitalizations:
- Average Daily Patients in Hospital statewide: 1,077
- Average Daily Patients in ICU Statewide: No Data
7 Day Average Cases per 100K population
- 6.8 positive cases per 100,00 population, Statewide
- 7.5 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Speaker Johnson Moves on Two-Step Stopgap to Avoid Shutdown
House Speaker Mike Johnson (R-La.) rolled out a two-step government funding stopgap bill on Saturday, settling on an unusual approach to avert a government shutdown that is already getting pushback from Republicans with just days until a Friday funding deadline. The “laddered” continuing resolution (CR) released Saturday would have some funding run out on Jan. 19, and the rest of the funding on Feb. 2 — an approach intended to discourage negotiation of a whole-of-government omnibus funding bill and to encourage the House and Senate to negotiate on the 12 regular funding bill.
The Jan. 19 date would be the funding deadline for government programs and agencies covered under regular appropriations bills pertaining to agriculture, rural development, and Food and Drug Administration; energy and water development; military construction and Veterans Affairs; and Transportation, Housing, and Urban Development. Funding for all other agencies and programs would run out on Feb. 2, creating the potential for a partial government shutdown before a full government shutdown.
Here are five takeaways from Tuesday night from Politico
Honda Boosts U.S. Factory Workers’ Pay by 11% After UAW Wins in Detroit
Honda Motor is giving many U.S. factory workers an 11% pay bump and making other improvements for these employees, a move that follows major gains secured by the United Auto Workers union in Detroit last month. The base wage increase is effective in January, according to a memo viewed by The Wall Street Journal. The Japanese automaker is also cutting the time it takes to reach the top wage in half to three from six years, a change that is similar to one won by the UAW in its negotiations with General Motors, Ford Motor and Chrysler-parent Stellantis.
Since 2021, Honda has added more than 10 new benefits and programs, including child-care reimbursement and student-loan repayment, In the memo, Honda said worker compensation is based on achieving competitive pay, and company leaders will continue to monitor the market conditions to attract and retain employees. The move by Honda, an automaker whose U.S. factories aren’t unionized, shows how quickly the historic wins achieved by the UAW in negotiating new labor contracts with the Detroit automakers are rippling throughout the car business
US Army Eyes $3.1 Billion Ammo Production Boost in New Spending Ask
The U.S. Army plans to spend $3.1 billion in emergency fiscal 2024 supplemental funding to boost domestic 155mm artillery munition production if lawmakers approve the pending White House request, the service’s acquisition chief said during a Nov. 7 press briefing. Congress is considering President Biden’s budget package of roughly $106 billion in emergency supplemental funds. The measure aims to support U.S. and allies’ defense needs, including Ukraine and Israel.
The service has already taken major steps over the last year to strengthen its 155mm industrial base. Prior to the war in Ukraine, the U.S. could build about 14,400 of the artillery shells per month. But as Ukrainian forces burn through the ammunition for howitzers sent to the country, the U.S. is hoping to ramp up production to roughly 100,000 shells a month by the end of calendar year 2025, Bush said. Last month, the Army also awarded $1.5 billion in contracts to nine companies in the U.S., Canada, India and Poland to boost global production of 155mm artillery rounds.
Honda, Nissan Hike Full-year Forecasts
Japanese car giants Honda and Nissan on Thursday lifted their full-year sales and profit forecasts thanks to brisk sales in global markets and a weaker yen. However, they pointed out that fierce price competition in China was posing a challenge for Japanese automakers. For the year to March 2024, Honda estimated a net profit of 930 billion yen ($6.18 billion) and 1.2 trillion yen operating profit on sales of 20 trillion yen.
They are up from previous forecasts of 800 billion yen net profit, one trillion yen operating profit, and sales of 18.2 trillion yen. "Although the environment has been challenging in China and Asia," Honda said in a statement it boosted the full-year forecasts "reflecting further strengthening of our earnings structure as well as favourable currency effects." The yen has fallen sharply in recent months as the Bank of Japan sticks to its ultra-loose monetary policy at the same time the Federal Reserve and other major central banks pushed interest rates to multi-year highs.
Going Concern? Last-Minute Bid Would Seek to Revive Collapsed Trucker
Kansas City, Mo.-based Jack Cooper Transport plans instead to file this month what is known as a going concern bid, arguing that it has a viable plan to revive Yellow, according to the people familiar with the plan. The specialized operator hauls automobiles for carmakers. Their bid is backed by $1 billion in financing and support from the Teamsters union and some U.S. lawmakers. The improbable effort would require the Treasury Department to defer repayment for several years of a $700 million loan provided to Yellow under a Covid pandemic-era bailout, one of several debts that helped push one of the country’s biggest truckers into collapse earlier this year.
The effort comes as the sale of Yellow’s sprawling network of trucking terminals and tens of thousands of trucks and trailers is moving through U.S. Bankruptcy Court. The bankruptcy process has a deadline Thursday for submission of bids for real-estate assets, with a minimum of $1.525 billion already set for the land and buildings ahead of an auction scheduled for Nov. 28. That would be enough to repay the company’s secured creditors, including the $700 million federal loan, and to cover wages and other payments owed to laid off workers.
Global Conflicts Fuel Demand for US-Made Fighter Jets
Geopolitical tensions, particularly Russia’s invasion of Ukraine, are driving the strongest defense market demand since 2008-09, panelists said Nov. 8 during the second day of Aviation Week’s A&D Programs event in Washington.
Aviation Week forecasts $1.01 trillion in global military aircraft deliveries from 2024-2033, the first time such a forecast has exceeded the $1 trillion threshold. It is set to be dominated by fighter jets manufactured by “Westernized” (non-Chinese and non-Russian) defense primes–which are expected to account for $800 billion of that sum. In terms of delivery value, Lockheed Martin is predicted to capture $203 billion in sales–$165 billion of which will be the F-35 program–followed by Boeing with $113 billion and Northrop Grumman with $53 billion.
Orders for German Machine Tools Fall
German machine-tool builders’ new orders fell by -9.0% year-over-year during the third quarter of 2023, according to the German Machine Tool Builders' Assn. (VDW), and the new-order total is down -7.0% during the first nine months of 2023. The order volumes from German customers have been only slightly stronger than from abroad for VDW members – who comprise one of the largest cohorts that country’s mechanical engineering sector. Germany also has the third-largest machine-tool manufacturing industry in the world, with 64% of its products exported to markets in Europe and worldwide.
The falling order volume is comparable to the trend reported for U.S. machine-tool demand. Through August, according to the Assn. for Manufacturing Technology’s U.S. Manufacturing Technology Orders report, 2023 U.S. machine tool orders are down -12.6% compared to the same period of 2022. VDW blamed the decrease in orders on the familiar complex of issues undermining manufacturing activity around the world: low levels of capital investment; high interest and inflation rates slowing new investment, in Germany and Europe; consumer demand focused on services over durable goods; and a decline in inventory levels following an extended period of supply bottlenecks.
Read more at American Machinist
UK Economy Fails to Grow but Sidesteps Start of a Recession
Britain's stagnating economy failed to grow in the July-to-September period but at least managed to avoid the start of a recession, figures from the Office for National Statistics showed on Friday. The 0% change in gross domestic product in the third quarter was a touch better than a forecast for a 0.1% fall in a Reuters poll of economists, which many analysts said was likely to represent the start of a recession. The BoE, which acknowledges the economic pain being caused by its 14 back-to-back interest rate increases over nearly two years to August, had been expecting a flat reading for GDP in the third quarter.
Britain's economy has failed to recover the kind of growth it enjoyed before the 2008-09 global financial crisis and the weak outlook is putting pressure on finance minister Jeremy Hunt to come up with pro-growth measures in a Nov. 22 budget update. In the three months to September, output in Britain's huge services sector fell by 0.1%, industrial production was broadly flat and construction grew by 0.1%, the statistics office said.
Bangladesh Garment Workers ‘Frustrated’ by Gov’t Wage Hike After Protests
Authorities in Bangladesh have announced a new salary structure for protesting garment factory workers with a 56 percent increase in the monthly minimum wage to $113 from the previous $75, a decision rejected by some workers’ groups as too small and “extremely frustrating”. State Minister for Labour and Employment Monnujan Sufian announced the decision on Tuesday after a meeting of a government-formed wage board made up of representatives of factory owners and workers.
Tens of thousands of workers, demanding a $208 monthly minimum wage, demonstrated in the streets. Four factories were torched and at least two workers were killed in the violence, as the workers blocked highways and fought with police. The country has about 3,500 garment factories that account for 85 per cent of its $55 billion in annual exports which supply products to many of the world's top fashion retailers including Levi's, Zara and H&M.
Boeing Data Published by Lockbit Hacking Gang
Internal data from Boeing one of the world's largest defence and space contractors, was published online on Friday by Lockbit, a cybercrime gang which extorts its victims by stealing and releasing data unless a ransom is paid. The hackers in October said they had obtained "a tremendous amount" of sensitive data from the aerospace giant and would dump it online if Boeing didn't pay a ransom by Nov. 2. According to a post on Lockbit's website, the data from Boeing was published in the early hours of Friday morning. The files mostly date to late October.
Boeing said it "remains confident" the event does not pose a threat to aircraft or flight safety, but declined to comment on whether defense or other sensitive data had been obtained by Lockbit. Lockbit ransomware, first seen on Russian-language-based cybercrime forums in January 2020, has been detected all over the world, with organisations in the United States, India and Brazil among common targets, cybersecurity firm Trend Micro said last year.
Shimmering
observing time.
Read and see more at The Toronto Star