Member Briefing November 2, 2022

Posted By: Harold King Daily Briefing,

Manufacturing Growth Slows To Two-Year Low

The Institute for Supply Management’s Purchasing Manager’s Index dropped 0.7 points to 50.2%, indicating extremely slow growth in the overall manufacturing economy. According to the ISM, the manufacturing economy has grown every month since May 2020, but the growth seen in October was the slowest it has been since then. Chair of the Institute’s Manufacturing Business Survey Committee Timothy Fiore said the results reflected manufacturers anticipating fewer orders.

Despite the drop in the PMI, the ISM’s three primary indexes improved or remained flat. New orders continued to contract in October, but at a slower rate than before, improving by 2.1 points to land at 49.2%, less than a full percentage point away from growth. The production index grew by 1.7 points to continue to grow at 52.3%, and the employment index added 1.3 points to land at 50.0% exactly, indicating no change from the previous month. Survey respondents saw customer demand slow amid concerns over a possible recession. One leader, from the electrical equipment and appliances industry, said a drop in the housing market was leading to adverse effects for their business.

Read more at IndustryWeek

War in Ukraine Headlines

Job Openings Surged in September

Job openings surged in September despite Federal Reserve efforts aimed at loosening up a historically tight labor market that has helped feed the highest inflation readings in four decades. Employment openings for the month totaled 10.72 million according to data Tuesday from the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey. September’s data indicates that there are 1.9 job openings for every available worker. The number of workers who left their jobs voluntarily stayed largely even last month - the quits rate, remained at 2.7 percent.

In Manufacturing there were 806,000 job openings in September down significantly from 846,000 in August and 941,000 in September 2021. There with 362,000 separations in the sector down from 417,000 in August and 439,000 in September 2001.

Fed Meeting Focus is On Interest Rates’ Coming Path

Wall Street analysts will be focused today on what Federal Reserve Chairman Jerome Powell says about whether the central bank might slow down interest-rate rises at its next policy meeting in December. Fed officials have already indicated that they are likely to raise their benchmark federal-funds rate by 0.75 percentage point this week to a range between 3.75% and 4%. That would mark their fourth consecutive increase of that size as they seek to reduce inflation by slowing the economy.

Some of the officials recently began signaling their desire to start reducing the size of increases after this week and to potentially stop lifting rates early next year so they can see the effects of their moves. Those officials and several private-sector economists have warned of growing risks that the Fed will raise rates too much and cause an unnecessarily sharp slowdown. Until June, the Fed hadn’t raised interest rates by 0.75 point, or 75 basis points, since 1994.

Read more at the WSJ

US COVID - COVID ‘Variant Soup’ is Making Winter Surges Hard to Predict

The current crop of immunity-dodging offshoots of the Omicron variant of SARS-CoV-2 is unprecedented in its diversity. This complexity makes it harder to predict coming waves of infection. It might even lead to a ‘double wave’ in some places, as first one variant and then another overtakes a population. But amid the chaos, patterns are emerging. The swarm has helped scientists to pinpoint a handful of immunity-evading mutations that power a variant’s spread. Globally, a few heavyweight variants have emerged, yielding different outcomes in different regions — at least, so far.

In Europe, North America and Africa, the prevalence of Omicron offshoots in the BQ.1 family is rising quickly, even as overall cases seem to fall. In Asian countries including Singapore, Bangladesh and India, a lineage called XBB has already set off fresh waves of infection. Scientists are closely watching several regions where both are circulating, to see which has the edge.

Read more at Nature

NY-19 In Toss Up, Candidates Court Moderates by Calling Each Other Extreme

Sherry Salvatore is the kind of voter causing grief for both Republicans and Democrats. She thinks Republican Marc Molinaro should win his congressional race in a wide swath of upstate New York because the Dutchess County executive — who has been running for various elected offices since he was 18 years old — has “paid his dues. He’s a good man, and it’s his turn.” But the 76-year-old Republican isn’t sold on any one party line. Abortion rights are important to her, too. A good share of New York’s new 19th Congressional District is filled with voters like Salvatore, open to ticket splitting and turned off by politicians sitting too far on either end of the political spectrum.

POLITICO’s forecast lists it as one of the two toss-up races in New York — of the 28 toss-up races nationwide — in a district that President Joe Biden would have won in 2020 by 5 percentage points. So both Molinaro and his Democratic opponent Josh Riley are working to convince voters they are affable moderates while trying to paint their opponents as wild zealots.

Read more at Politico

Crime and Public Safety Dominate Final Week in New York Governor's Race

Crime and public safety concerns among New York voters are expected to continue to dominate the final stretch of the campaign as Democratic Gov. Kathy Hochul and her Republican opponent Rep. Lee Zeldin sought to convince voters they are best to handle the issue. Concerns over crime have consistently registered with voters as a top issue over the last several months, though have been recently subsumed by the economy and inflationary woes for New Yorkers. Voters have also recently ranked "threats to democracy" as a top concern for them as well.

Zeldin on Monday once again pledged to take an ax to the recently approved package of criminal justice law changes in Albany if elected. Hochul, meanwhile, pointed to data showing violent crimes like shootings and homicides are down in New York. She accused Republicans on Monday in an interview on MSNBC of attempting to stoke fears around crime in New York and Democratic-led states across the country.

Read more at State of Politics

When is a COVID Nasal Vaccine Coming?

The U.S. led the world in quickly developing COVID-19 vaccines—one of the few bright spots in the country’s otherwise criticized response. But while injectable vaccines are effective in protecting people from getting sick with COVID-19, they are less able to block infection. In order to put the pandemic behind us, the world will need a way to stop infections and spread of the virus. That’s where a different type of vaccine, one that works at the places where the virus gets into the body, will likely prove useful.

Here, though, the U.S. is losing its edge. In September, India approved a nasal COVID-19 vaccine, and in October, China began administering an inhalable one—the world’s first such vaccine against any disease. Both countries conducted their own clinical safety and efficacy tests in humans (but have not yet published the complete and latest results).

Read more at Time

Pfizer Boosts 2022 COVID Vaccine Forecast

Pfizer Inc on Tuesday raised its forecast for 2022 sales of its COVID-19 vaccine by $2 billion to $34 billion and said new deals and drugs in development should help replace future declining vaccine sales and lost revenue from patent expirations. The U.S. drugmaker's shares rose 2.7% to $47.84 as its third-quarter profit beat estimates, mainly due to higher-than-expected sales of the vaccine it shares with German partner BioNTech

Chief Executive Albert Bourla said in an interview that the company is trying to showcase what a "post-COVID crisis" Pfizer will look like. COVID-19 treatments and vaccines will be multibillion-dollar franchises, he said, "but that will be stable, not with ups and downs. And the growth will be driven by the pipeline and the business development."

Read more at Reuters

In the Battle for Talent, Employers May be Regaining the Upper Hand

The global pandemic caused the greatest workplace upheaval in a generation, with unprecedented movement in the labour market and a significant change in our working patterns.  Alongside the shift to remote and flexible working, many initiatives to support employees were introduced by companies across the world – from counselling and wellbeing schemes, discounts on meals and gym memberships, to investing in Learning & Development. Employees experienced a level of flexibility and freedom they had not previously encountered.

Two years later, the balance of power is starting to shift back to employers as economic storm clouds gather and hiring slows. LinkedIn recently surveyed over 2,900 C-level executives from large organisations across the globe to understand how they are approaching this period of uncertainty, given the intense pressure many are under to manage costs and boost productivity while delivering returns to shareholders and investors.  They are seeing companies freeze hiring and request employees to return to the office.

Read more at World Economic Forum

Biden Warns Oil Firms He’ll Seek Tax on ‘Windfall’ Profits

President Joe Biden said he’d seek to impose higher taxes on oil companies that record “windfall” profits without reinvesting in production, with US gasoline prices still high a week ahead of midterm elections. He called the industry’s profits “a windfall of war.” Many Democrats have unsuccessfully sought a so-called windfall profit tax for more than a decade. No such proposal is likely to pass the current Senate, evenly divided between Democrats and Republicans.

Critics of such plans say they’ll deter companies from making the kind of investments that are crucial for increasing supply and keeping prices down, in the future -- a charge that may have more traction in the US, which unlike most European countries is itself a major oil and gas producer.  “Once again, the president is more worried about political posturing before the midterms than he is about advancing energy policies that will actually deliver for the American people,” said Chet Thompson, head of the American Fuel and Petrochemical Manufacturers.

Read more at Bloomberg

Toyota Eyes U.S., European Price Increases to Offset Higher Costs

Toyota Motor Corp., slammed by higher costs, microchip shortages and slumping profits, plans to increase sticker prices for U.S. customers to help soften the earnings blow. Price increases are also being eyed in Europe, which also fell to a regional quarterly loss. Toyota struggled to absorb a worldwide cost surge exceeding $2 billion in the July-September period.

Toyota has already been raising prices in line with rising material costs and inflation, but executives said more aggressive action or more frequent increases are probably needed. Executives said the bandwidth for increase is limited by customer expectations for certain models and segments, especially long-selling nameplates such as the Camry or Corolla. In the U.S., for example, customers expect the Corolla to run between $25,000 and $30,000, Nagata said.

Read more at Automotive News

America’s Tai faces Uphill Battle to Defuse EU EV Trade War Fears

U.S. Trade Representative Katherine Tai traveled more than 4,000 miles to prevent a transatlantic trade war over electric vehicles, but her EU counterparts signaled on Monday that they would be a tough crowd to win round. The growing spat hinges on U.S. legislation that encourages consumers via tax credits to “Buy American” when it comes to choosing an electric car.

At a time when the U.S. and Europe want to present a united front against Russia, this protectionist measure has triggered outrage in many EU countries, including France and Germany, two leading European carmaking nations. Beyond the EU, China, Japan and South Korea have also voiced concern.

Read more at Politico

Mortgage Giant Rocket Plunges Back to Earth, Hit by Rising Rates

Rocket Mortgage harnessed a generation of low rates to refinance millions of homeowners. Last year, it racked up more than double the refi volume of any other lender, accounting for more than $1 of every $10 lent out during a boom for the mortgage industry. Now the Federal Reserve’s efforts to fight inflation have sent mortgage rates soaring. And refinancing, the driver of Rocket’s business, no longer makes sense for many homeowners.

With mortgage rates now above 7%, just 133,000 U.S. homeowners can save money by refinancing at today’s rates, down from a peak of over 19 million in late 2020, according to Black Knight Inc., BKI 0.33%increase; green up pointing triangle a mortgage technology and data provider. Refinancing accounted for some 82% of the total dollar volume of Rocket’s loans last year, according to Inside Mortgage Finance, an industry research firm.

Read more at The WSJ