Member Briefing November 14, 2023
New York Is Set to Make Regents Exams Optional for Graduation
New York's new requirements for high school graduation would allow for more ways to assess what students know — outside of standardized testing — and would ensure access to career and technical education. A commission tasked with reimagining what it should take to earn a diploma presented a dozen recommendations Monday morning to the state Board of Regents, ranging from requiring "culturally responsive" training for teachers to reorganizing credit requirements into bigger categories.
The commission also recommended moving away from the standard four-year timeline for high school, suggesting that students should have three to six years to complete the requirements to graduate. Rosa said the Board of Regents, which makes statewide education policy, will need to digest the broad recommendations through the summer and into the fall. It's not clear when the board might adopt the recommendations or a revised version but Angelique Johnson-Dingle, deputy state commissioner of P-12 instructional support, said Monday SED would provide a timeline for the changes in the spring.
War in Israel Headlines
- Israel and Hamas: The Latest News – The Guardian
- US Launches 3rd Strikes on Iran-Linked Groups Amid Attacks on American Soldiers: Officials - ABC
- Israel Sharpens Warning to Lebanon as Cross-Border Hostilities Spike - Reuters
- Israeli Civilian Killed by Hezbollah Missile - AP
- Israel Warns of Wider War as It Presses On in Gaza - WSJ
- EU Nations Condemn Hamas for What they Describe as Use of Hospitals, Civilians as ‘Human Shields’ - AP
- Israel Calls on Hamas to Surrender Shifa Hospital Base – Fox News
- U.S. 'Actively Engaged' in Negotiations With Israel, Qatar, Hamas to Free Hostages – USA Today
- Internal State Dept. Memo Blasts Biden, U.S. Policy on Israel-Hamas War - Axios
- United Airlines to Resume Flights to Israel on Nov 24 – Reuters
- Map – Tracking Hamas’ Attack on Israel – Live Universal Awareness Map
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Russia Renews Missile Attacks on Kyiv, Attacks Intensify in the East - Reuters
- Ukraine Braces for Another Winter of Missile Attacks, Blackouts - WSJ
- Ukrainian Military Officer Coordinated Last Year’s Nord Stream Pipeline Attack – Washington Post
- Germany Set to Double Ukraine Military Aid – Reuters
- Jake Sullivan’s New Foreign Affairs Essay Reveals a Biden Administration in Denial About Ukraine – The Hill
- Ukraine Says Blast in Occupied Melitopol Killed 3 Russian Officers - NYT
- Ukraine Plans to Use Winter to Cut off Russia's Military Supply Chains and 'Freeze Them Out' of the Country, Official Says – Insider
- The Shadowy Network Smuggling European Microchips into Russia – 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
US Credit-Rating Outlook Changed to Negative by Moody’s
Moody’s Investors Service on Friday lowered its ratings outlook on the United States’ government to negative from stable, pointing to rising risks to the nation’s fiscal strength. The ratings agency has affirmed the long-term issuer and senior unsecured ratings of the U.S. at Aaa. “In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues,” the agency said. “Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.”
Brinkmanship in Washington has also been a contributing factor, Moody’s said. “Continued political polarization within US Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability,” the ratings agency said. As far as keeping the nation’s ratings at Aaa, Moody’s said that it expects the U.S. to “retain its exceptional economic strength.” “Further positive growth surprises over the medium term could at least slow the deterioration in debt affordability,” the agency said. Moody’s move to cut its outlook arrives as Congress faces the looming threat of a government shutdown once more.
Goldman Sachs, Morgan Stanley Diverge on Fed Rate-Cut Forecasts
The central bank will start cutting rates in June 2024, then again in September and every meeting from the fourth quarter onward, each in 25-basis point increments, Morgan Stanley researchers led by chief US economist Ellen Zentner said in their 2024 outlook on Sunday. That’ll take the policy rate down to 2.375% by the end of 2025, they said. Morgan Stanley’s team sees a weaker economy that warrants a greater magnitude of easing, though no recession. They expect unemployment to peak at 4.3% in 2025, compared with the Fed’s 4.1% estimate. Growth and inflation will be slower than officials anticipate, too.
Goldman Sachs, meanwhile, sees the first 25-basis-point reduction in the fourth quarter of 2024, followed by one cut per quarter through mid-2026 — a total of 175 basis points, with rates settling at a 3.5%-3.75% target range. The Goldman Sachs forecasts are closer to the central bank’s. Fed projections from September show two quarter-point cuts penciled in for next year and the policy rate ending 2025 at 3.9%, according to the median estimates of policymakers.
COVID Update – What to Know About the Latest COVID-19 Variant, HV.1
A new COVID-19 variant has entered the scene in the U.S. HV.1 was documented by the Centers for Disease Control and Prevention in low numbers over the summer. But now the strain has the highest prevalence of any, claiming responsibility for about a quarter of new coronavirus cases in the U.S. as of late October. The strain is still a subvariant of omicron – as is every strain that’s in circulation. It’s a descendent of EG.5, which is the second most common variant in the U.S.
The latest variant appears to be very similar to EG.5, also known as “eris.” So similar, in fact, that the World Health Organization doesn’t separate the two in its estimates. Eris is the most prominent strain globally, accounting for about 46% of global cases as of late October, according to WHO. That estimate also includes cases from HV.1 and another similar strain, HK.5. HV.1 doesn’t appear to cause more severe disease, but it is expected to bring the same high transmissibility that eris has. And with more cases comes more variants with more mutations.
Congress Barrels Toward Shutdown With House GOP Divided
Congress is heading toward a government shutdown as Friday’s funding deadline inches closer, with House Republicans at odds over Speaker Mike Johnson’s (R-La.) pitch to keep the lights on in Washington. Johnson unveiled an unconventional two-step stopgap bill over the weekend, which would extend funding at current levels for some agencies until mid-January and the rest through early February. That proposal, however, is already dividing the fractious House GOP conference, with some hard-line conservatives voicing opposition to the legislation because of the lack of spending cuts.
Top Democrats, meanwhile, have come out against Johnson’s plan, criticizing the “laddered” approach and denouncing the lack of aid for Israel or Ukraine in the legislation. Congress has just five days to avert a shutdown. Across the Capitol, the Senate will hold a procedural vote for its own legislation to avert a shutdown this week, moving a legislative vehicle that will be used for an eventual stopgap bill.
Looking for Clarity in an Increasingly Difficult Relationship - Biden and Xi to Meet on Wednesday
President Joe Biden and China’s Xi Jinping have no shortage of difficult issues to discuss when they sit down for their first talks in a year, even if expectations are low that their meeting will lead to major breakthroughs. Each leader has clear objectives for the highly anticipated talks Wednesday on the sidelines of the Asia-Pacific Economic Cooperation summit, a meeting that comes after what’s been a fractious year for the world’s two biggest economies.
Both Biden and Xi are looking to bring a greater measure of stability to a relationship that is being defined by differences over export controls, tensions over Taiwan, the wars in the Middle East and Europe, and more. Biden comes to San Francisco focused on managing the countries’ increasingly fierce economic competition and keeping open lines of communication to prevent misunderstandings that could lead to direct conflict between the two powers. Xi is looking for assurances from Biden. Xi wants to hear from Biden that the American president will not support Taiwan independence, will not start a new cold war and will not suppress China’s economic growth.
Goldman Sachs Forecasts Higher Returns on Commodities
Goldman Sachs expects increased returns on commodities over the next 12 months, buoyed by higher spot prices amid easing monetary policy and recession fears while the asset class also strengthens on hedging against geopolitical supply risks. The bank has forecast returns of 21% on commodities over a 12-month horizon on the oil-heavy S&P GSCI Commodity Index, led by returns of about 31% from energy and 17.8% from industrial metals.
"We recommend going long commodities in 2024, as we expect somewhat higher spot commodity prices from an improving cyclical backdrop, significant carry returns from structural tailwinds, and see hedging value against negative supply shocks," the bank said in a note dated Sunday. The bank expects "ongoing resilience" in demand to drive a recovery in oil prices, though factors including the possibility of a warmer fourth quarter and rising supply from some producers prompted it to trim its 2024 average Brent price forecast to $92 a barrel from $98 a barrel previously.
US CPI Preview: Forecasts From Seven Major Banks, Still to the High Side of the Fed’s Target
The US Bureau of Labor Statistics (BLS) will release the most important inflation measure, the US Consumer Price Index (CPI) figures, on Tuesday, November 14 at 13:30 GMT. As we get closer to the release time, here are the forecasts by the economists and researchers of seven major banks regarding the upcoming United States inflation print for the month of October. Headline CPI is set to come out at 0.1% month-on-month in October, a significant retreat from 0.4% in September. The year-on-year number will likely be dragged down from 3.7% to 3.3%. Core CPI is projected to remain at 4.1% YoY and rise by 0.3% MoM, a repeat of last month's increase.
Among the 7 is Wells Fargo: “Since the end of September, gas prices have steadily fallen and food inflation has appeared to move sideways. These dynamics underpin our call for the headline CPI to increase only 0.1% in October. If realized, that would be the smallest monthly gain since May. Yet, the modest rise will likely be overshadowed by continued strength in the core CPI, which we expect to increase 0.3% for the third straight month.”
Ford Production Workers at Kentucky, Louisville Vote Against New Labor Deal
Production workers at Ford's Louisville assembly and Kentucky truck plants have voted against the tentative labor agreement, while skilled trades workers voted in favor, the local chapter of the United Auto Workers (UAW) said on Monday. The ratification of the contract was voted down by 55% of the production workers whereas 69% of the skilled trades workers, which includes maintenance and construction employees backed it, the UAW Local 862 said in a Facebook post.
The vote signals that approval of the deal, which is set to significantly raise Ford's costs, is not guaranteed. The union and the company did not respond to Reuters requests for comment. The automaker had last month pulled its full-year forecast due to uncertainty over the pending ratification of the deal with the UAW.
Lenders are Issuing a Record Number of Foreclosure Notices Related to Risky Property Loans
Lenders this year have issued a record number of foreclosure notices for high-risk property loans, according to a Wall Street Journal analysis. Many of these loans are similar to second mortgages and commonly known as mezzanine loans. The increase in mezzanine-loan foreclosure announcements—while not large in absolute numbers—matters because it offers a more immediate measure of commercial real-estate distress than mortgage foreclosure rates.
Mezzanine loans have high interest rates and offer a faster and easier path to foreclose than mortgages. The Journal analysis found notices for 62 mezzanine loans and other high-risk loans this year through October. That is more than double the number for all of last year, and likely the highest total ever for a single year, as higher interest rates and rising vacancies punish the property sector.
Survey: Senior Loan Officers Report Higher Standards, Lower Demand For Business Loans
The October 2023 Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally correspond to the third quarter of 2023. Regarding loans to businesses, survey respondents, on balance, reported tighter standards and weaker demand for commercial and industrial (C&I) loans to firms of all sizes over the third quarter. Banks also reported tighter standards and weaker demand for all commercial real estate (CRE) loan categories.
Lending standards for commercial and industrial loans remained tight in Q4 according to the survey. A net percentage of 33.9% of domestic banks reported tightening lending standards for large and middle-market firms, while a net percentage of 30.4% said the same thing for small firms. Meanwhile, lending demand remained weak for the fifth straight quarter. A net percentage of -30.5% of domestic banks reported stronger demand for large and middle-market firms in Q4, but that was an improvement from -51.6% in Q3. Similarly, a net percentage of -49.1% noted stronger demand for small firms in Q4, down from -47.5% in Q3.
Read more at The Federal Reserve
China Factories Pump Up Exports
China’s efforts to export its way out of an economic slump are triggering trade tensions around the world. Chinese manufacturers of electric vehicles, solar panels and other products are trying harder to muscle into overseas markets amid weak demand at home. Suppliers have flooded some countries with cheap goods, upsetting competitors and leading to regulatory moves to slow the flow of inbound volumes.
The U.S. recently determined that steelmakers in China and two other countries were selling at unfairly low prices. European regulators are investigating potential subsidies for China’s low-cost electric vehicles. ABN AMRO estimates that prices of goods shipped from China have fallen around 20% this year. That’s helping reduce inflation in supply chains. JPMorgan estimates that China’s falling producer prices will lower global core goods inflation by 0.7 percentage point over the second half of 2023.
Rolls-Royce Completes 100% SAF Test Program & Full Power UltraFan Run
The Dubai Airshow got underway yesterday, and news from around the industry is already flooding in. Rolls-Royce is getting its announcements out early, revealing two significant milestones that have taken place recently, both involving experiments into engine programs.
The first piece of news announced by the engine maker was that it has completed its program to test all of its commercial engine offerings on a 100% blend of sustainable aviation fuel. (Later this month Virgin Atlantic is planning to operate a commercial flight only powered by SAF using Rolls-Royce Trent 1000 engines.) Simultaneously, the Derby based firm revealed that it has now run its UltraFan demonstrator at 100% power.
State Awards RCC Almost $1 Million for Industrial Maintenance Training
Rockland Community College has received a $933,000 state grant to implement a new industrial machinery maintenance mechanics pathway to provide skill-based training for students that results in an industry-recognized credential to address talent shortages for Hudson Valley employers in the advanced manufacturing industry. “The state’s timely investment in RCC will enable us to work with employers to create industry-responsive pathways that lead to family-sustaining jobs,” said Kevin Stump, the college’s vice president of Economic Mobility and Workforce Innovation.
The available programs help students find employment in fields where the average beginning salary is at least $40,000. The programs provide opportunities to gain industry-specific certificates or transfer into degree-seeking programs. The new pathway program is expected to be in place by next spring.
Airbus to Reorganize its Defense & Space Business
Airbus will be reorganizing its Airbus Defence and Space subsidiary “in order to cope with an evolving defence and security environment,” the group stated in its recent Q3 2023 statement. The revamp seeks to adopt new “ways of working,” and to “reinforce end-to-end accountability and ownership in the business lines and improve competitiveness.” Reportedly, the reorganization will involve Airbus cutting about 750 employees from approximately 34,000 now attached to the Defence and Space subsidiary.
The organizational changes were outlined in the manufacturer’s recent Q3 report, though Airbus has not confirmed the number of reductions, nor the schedule for carrying out the reorganization. Published reports add that the layoffs will not necessarily take place, as Airbus will accomplish the reduction through employee attrition and delays in hiring replacements. The unit posted a €300-million third-quarter loss ($321 million) that it assigned to charges related to its various communication satellite and defense technology programs.
Read more at American Machinist