Member Briefing November 21, 2024
American Companies Are Stocking Up to Get Ahead of Trump’s China Tariffs
American businesses are dusting off a playbook they used during Trump’s first term: stocking up on imported goods before tariffs are enacted. They are also considering how to cope with the levies if and when enacted—whether they will be able to raise prices and whether they will need to find alternatives to their Chinese manufacturers. When Trump began his trade war against China in 2018, U.S. businesses scrambled to front-load imports before tariffs were implemented, according to an International Monetary Fund analysis. As a result, the U.S.’s trade deficit with China—how much imports exceed exports—rose in 2018 before falling in 2019.
Already, exports from China surged last month, which some economists think could have been driven at least in part by front-loading amid uncertainty around election results. Outbound shipments from China rose nearly 13% in October from a year earlier, well above consensus expectations and up sharply from 2.4% growth in September. Chinese exports growth should remain strong through the next few months because of front-loading, Wall Street economists said.
Nvidia Nearly Doubles Revenue On Strong AI Demand
Nvidia reported third-quarter earnings that beat expectations for sales and earnings while delivering a better-than-expected forecast for the current quarter. The results show that Nvidia is continuing to grow quickly while demand for its powerful artificial intelligence chips remains high. Earnings per share were 81 cents adjusted and revenue was $35.08 billion. Nvidia said it expects about $37.5 billion plus or minus 2% in current-quarter sales. Net income during the quarter rose to $19.3 billion, or 78 cents per share, versus $9.24 billion, or 67 cents per share, in the year-ago period. Nvidia’s gross margin rose to 73.5%, slightly higher than analysts’ estimates, and the company said the increase was because it is selling more data center chips.
The fourth-quarter forecast implies year-to-year growth of about 70% from a year earlier, a slowdown from 265% annual growth in the same period a year prior. Revenue continues to surge at Nvidia, rising 94% on an annual basis during the quarter that ended on Oct. 27. That is still a consecutive slowdown from the previous three quarters, when sales rose 122%, 262%, and 265%, respectively.
Weekly Mortgage Demand Inched Up, Despite Higher Interest Rates
After flatlining the week before, mortgage demand rose last week, despite mortgage rates increasing for the fourth straight week. Total application volume climbed 1.7% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.90% from 6.86%, with points rising to 0.70 from 0.60 (including the origination fee) for loans with a 20% down payment. That was the highest level since July. Mortgage rates are about flat so far this week, according to a separate survey from Mortgage News Daily.
Applications for a mortgage to purchase a home rose 2% for the week but were 1% lower than the same week one year ago. Purchase demand was driven by conventional and FHA loans, with FHA purchase applications seeing a 7% increase. Applications to refinance a home loan rose 2% for the week and were 43% higher than the same week one year ago. Demand was driven by a 10% increase in VA applications.
Global Headlines
Middle East
- Gaza Health Officials Say Israeli Attacks Kill At Least 17 - VOA
- Israel Hit Part Of Iran's Nuclear Programme, Netanyahu Says - BBC
- The Houthis Appear Determined To Score A Hit On The American And European Warships In The Red Sea, US Envoy Says – Business Insider
- Biden Blocks Americans From Doing Business With 2 Israeli Companies - Newsweek
- Israel Finds Large Troves of Russian Arms in Hezbollah’s Hands - WSJ
- Palestinian Olive Harvest Under Threat From Israeli Attacks And Restrictions - BBC
- US Vetoes UN Security Council Resolution On Gaza Ceasefire - Reuters
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Zelensky: Loss Of ‘Unity Between Ukraine And The United States’ Would Be ‘Very Dangerous’ – The Hill
- Ukraine Front Could 'Collapse' As Russia Gains Accelerate, Experts Warn - BBC
- Ukraine Fires U.K. Storm Shadow Cruise Missiles Into Russia - WSJ
- US To Send Antipersonnel Mines To Ukraine - VOA
- Moscow Launching 'Psychological Attack' on Ukraine - Newsweek
- Russia Stirs Ukraine Truce Speculation With Eye on Trump - Bloomberg
- US Embassy In Ukraine Warns Of ‘Significant Air Attack,’ Closes – The Hill
- NATO Holds Large Arctic Exercises In Russia's Backyard - VOA
- Russia Starts Drafting Ukrainians From Occupied Territories - Newsweek
- 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
- G20 Wraps With Talk Of Climate Change, Poverty Reduction, Tax On Billionaires - VOA
- Did AI Influence the Election Result? Experts' Verdicts - Newsweek
- Chinese Defense Minister Declines Meeting With Pentagon Chief - Reuters
- Chinese Ship Suspected Of Undersea Cable Sabotage Detained In 'NATO Lake' - Newsweek
- 'Gracias Rafa' - Why Retiring Nadal Means So Much - BBC
- Hong Kong's Jimmy Lai Takes Stand For First Time In His National Security Trial - SCMP
- In Brazil, Xi Jinping Cultivates a Friend as He Braces for Trump - WSJ
- Solar Powerhouse: China Holds The Key To Asia's Green Energy Goals – Nikkei Asia
- US ‘Taking Steps’ To Impose New Visa Restrictions On Hong Kong Officials After 45 Democracy Figures Jailed - HKFP
- Doctors Without Borders Halts Operations In Haiti's Capital - Reuters
Policy and Politics
How Trump And Republicans Could Pay For New Tax Cuts
President-elect Trump and Republican lawmakers are gearing up to push a massive tax-cut bill through Congress next year but will face pressure to find ways to cover the costs. While Trump and many of his GOP colleagues argue that well-crafted tax cuts pay for themselves, a vocal band of fiscal hawks within the party are holding out for serious spending cuts. The $36 trillion federal debt is a point of contention for many Republicans now as they start to consider a top-line budget reconciliation number, a key step toward advancing an eventual tax cut package.
Here’s a look at ways Republicans could consider paying for their tax cuts including tariffs, cuts to the IRA, international business taxes, the ERC and using the dynamic scoring model that takes the growth tax cuts foster into account.
'Department Of Government Efficiency' Faces Daunting Task
The Department of Government Efficiency, which, despite its name, will likely be an advisory committee rather than an actual department, will be co-chaired by Tesla and SpaceX founder Elon Musk, and wealthy former Republican presidential contender Vivek Ramaswamy. Musk and Ramaswamy have set July 4, 2026 — the 250th anniversary of the signing of the Declaration of Independence — as the target date for completing their work, which is expected to reach into all corners of the sprawling U.S. government in search of spending to cut and bureaucracy to eliminate.
Tom Schatz, president of Citizens Against Government Waste, told VOA that DOGE will be “the first significant and comprehensive private sector review of the federal government” since President Ronald Reagan created the Grace Commission, a committee to recommend improvements to government efficiency, in 1982. How impactful DOGE will ultimately be, Schatz said, will depend on a number of factors outside the commission’s control. “It all depends on what President Trump does with the recommendations,” Schatz said. “Recommendations have to be implemented, either through executive orders or legislation … but it takes leadership, and it takes really Congress, in many cases, to carry out the recommendations.”
Stewart-Cousins: Special Session ‘Unlikely’
Speaking at a breakfast hosted by the Association for a Better New York on Tuesday, State Senate Majority Leader Andrea Stewart-Cousins said it was “unlikely” that she would call her members back for a special session before the end of the year. Some Democrats from both chambers discussed the prospect at the Somos legislative conference in Puerto Rico earlier this month, but both legislative leaders at the time cast doubt on the idea. Stewart-Cousins remarks Tuesday threw additional cold water on the pitch. Stewart-Cousins spent much of her speech at ABNY discussing her chamber’s accomplishments on addressing affordability issues. She cited the expansion of the Empire State Child Tax Credit, capping property taxes and a revised tax credit to spur the production of affordable housing. “Affordability is always in the center of what we are trying to do,” Stewart-Cousins said.
Though some lawmakers and advocacy groups have said they’d like to pass bills that aimed at helping immigrants, addressing climate change and protecting transgender New Yorkers to combat the Trump presidency, Stewart-Cousins offered no specifics on what her priorities will be next year. “I think our priorities remain the same,” Stewart-Cousins said when asked about the next session by ABNY Chair Steve Rubenstein. Asked whether next year will be focused on combating Trump, Stewart-Cousins said her members would be “focused on the people of New York.”
Health and Wellness
Beat Seasonal Depression With These Tips
Seasonal depression, also called seasonal affective disorder (SAD), is a mental health condition that people tend to experience at specific times of the year. Researchers don’t know exactly what causes SAD, but it is believed that having less exposure to daylight (which is typical during the long, dark winter months for much of the United States) throws off levels of serotonin, a mood-regulating chemical in the brain. Many people experience “winter blues” as the days get shorter and colder. Back-to-back holidays can also bring on financial stress, and some people feel a letdown when the festivities are over. However, this is not the same thing as seasonal depression. In fact, people can even get sad in the summer.
People with seasonal depression may feel hopeless, frustrated, irritable, and have memory problems or difficulty concentrating. You may have a greater risk for SAD if someone in your family has depression or you live farther north, where there are fewer hours of daylight in the winter. Women also seem to experience seasonal depression more often than men do. The upside to feeling down during the winter is that there are some things you can do to feel better. Here's what therapists recommend for coping with seasonal depression these include avoiding social isolation, exercise outside and limiting screen time.
Transition 2024
- Trump Team Ramps Up Pressure On Senate GOP To Approve Controversial Nominees – The Hill
- Trump Picks Mehmet Oz To Serve As Medicare And Medicaid Services Administrator – Washington Post
- Trump Names Former Wrestling Executive Linda McMahon As His Pick For Education Secretary - NBC
- Trump picks former acting AG Matthew Whitaker as nominee for NATO ambassador - Reuters
- Matt Gaetz Controversy Explained: House Ethics Committee Will Meet Today—But Unclear If Report Will Be Released - Forbes
- Delta CEO Says Trump Administration’s Approach To Regulation Could Be ‘Breath Of Fresh Air’ - CNBC
- Once Again, Polls Underestimated Trump. Experts Only Have A Hunch Why - Reuters
- Tracking Trump’s Cabinet Picks – Politico
Industry News
GlobalFoundries To Receive $1.5B CHIPS Grant For Manufacturing
GlobalFoundries is receiving $1.5 billion for chip manufacturing. The money will be used to create a new, large-scale fabrication facility alongside its current facility in Malta. Funding will also be used to expand the existing facility. The funding is part of an investment from the CHIPS and Science Act. The grant was initially proposed in February.
"This investment will make sure America’s semiconductor future is made in the Capital Region, not China,” Sen. Chuck Schumer said in a statement Wednesday. It's estimated, according to a release, that the new projects will "create approximately 9,000 construction and 1,000 manufacturing jobs. The facility in Malta will receive $1.3 billion, while the remaining funding is going to a GlobalFoundries location in Vermont. Schumer's statement noted that only four companies outside China "provide current and mature foundry capabilities at the scale of GlobalFoundries," and of those four, only GlobalFoundries has American headquarters.
Read more at NY State of Politics
Data Shows More Loans Are Being Rejected — But Why?
It’s been getting a little harder to get approved for a loan this year, according to a new survey out this week from the New York Federal Reserve. It found that rejection rates for loan applications are higher than they were in 2023 for credit cards, auto loans, mortgages and refinances.
Rising rejection rates aren’t necessarily a red flag for the economy. They can also be a sign that more people are applying for loans. That’s because when the number of loan applications goes up, “Naturally with that, you would expect that the number of rejections that you’re going to experience is going to be a little bit higher,” said Dominik Mjartan, CEO of American Pride Bank in Macon, Georgia. He said demand for mortgages, and other loans, has been rising ever since the Federal Reserve made it clear that it was going to start cutting interest rates. “Customers started to reach out, because they knew that was coming. So they wanted to be in the queue to benefit from the lower rates.”
Honda Weighs Production Pivot Ahead Of Potential Tariffs
Honda Motor Co.’s decision to ramp up electrical vehicle production in the U.S. could influence the automaker’s overall North American production strategy as it seeks ways to avert import tariffs proposed by President-elect Donald Trump. While executives with the automaker acknowledged Trump’s reelection could curtail U.S. EV tax credits, the company remains committed to retooling its Ohio manufacturing sites for EV production to support U.S. sales.
Shinji Aoyama, Honda EVP and representative executive officer, said during the company’s Q3 earnings call with analysts Nov. 6 that converting its Ohio sites for electrification was a long-term decision made to improve the automaker’s position in the North American EV marketplace. But Honda also views its U.S. investments as flexible, allowing it to adapt to market conditions, Aoyama said.
Read more at Manufacturing Dive
Ford To Cut 14% Of European Jobs, Blaming EV Shift Challenge, Chinese Rivals
Ford said on Wednesday it would cut around 14% of its European workforce, blaming losses in recent years amid weak demand for electric vehicles, poor government support for the shift to EVs, and competition from subsidized Chinese rivals. The U.S. automaker is the latest - after Nissan, Stellantis and GM - to cut costs as the industry faces challenges that include EVs that are too expensive for consumers to buy.
Ford said the 4,000 job cuts would be primarily in Germany and the United Kingdom. Globally, the layoffs represent around 2.3% of Ford's workforce of 174,000. The measures will be a big blow for Germany in particular, Europe's largest economy, where the region's biggest car maker Volkswagen is threatening to close factories, slash wages and cut thousands of jobs to allow it to compete better.
EV Charging Company Blink Pulls Back on Full-Year Guidance
Blink Charging’s third-quarter results revealed that while service revenue was up 30% for the quarter compared to last year, overall sales of $25 million were down 32% from a year earlier. The culprit came from Blink’s product sales, which came in at $13.4 million, a significant drop from $35 million in Q3 ’23. The reduction was primarily driven by fewer sales of DC fast chargers, particularly to automotive dealerships.
The drop wasn’t completely unexpected by Blink leaders. This spring, CEO Brendan Jones first noted the company had seen lower bookings and that executives were “closely monitoring” the market. In August, Jones said that the trend had “persisted” during the second quarter, largely driven by the slowdown in EV sales. Now, that impact has resulted in an official guidance reduction. Rather than the previously targeted $165 million to $175 million in full 2024 revenue, Blink executives now expect a range from $125 million to $135 million.
Other Company Earnings of Note
Target Corporation reported third-quarter adjusted earnings per share of $1.85, missing the street view of $2.30. Quarterly total revenue of $25.67 billion (+1.1% year over year) missed the analyst consensus estimate of $25.90 billion. “We encountered some unique challenges and cost pressures that impacted our bottom-line performance,” said Brian Cornell, chair and chief executive officer of Target. The third-quarter gross margin rate decreased by 0.2 percentage points to 27.2%. This was primarily due to higher digital fulfillment and supply chain costs, driven by increased inventory levels, higher digital sales volume, and new supply chain facilities coming online. Operating income of $1.2 billion was 11.2% lower than last year. Yahoo
TJX Cos raised its annual profit forecast on Wednesday, benefiting from lower costs and strong demand from cash-strapped customers flocking to its off-price stores for products such as apparel and footwear. The TJ Maxx parent has hit the right spot as customers continue to hunt for value and better deals even as inflationary pressures ease, driving steady traffic and sales at its outlets. The Marshalls chain parent expects annual earnings per share of $4.15 to $4.17, up from its prior forecast of $4.09 to $4.13. It, however, maintained its target of 3% annual comparable store sales growth. Yahoo
Jaguar's Rebrand Called 'Disastrous' as Focus on Diversity Comes Under Fire
Luxury British car manufacturer Jaguar's rebrand has been met with confusion and criticism online after the company posted a promotional video focusing on diversity and not showing any cars. The new ad, posted by the brand on X, formerly Twitter, on Tuesday, features models of all ages and races stepping out of an elevator adorned in avant-garde makeup and clothes, with various marketing slogans such as "live vivid" and "delete ordinary" peppered throughout the 30-second commercial.
Despite what you may expect from one of the world's most storied vehicle brands, there is a distinct lack of any cars, which has prompted backlash online, including from Tesla CEO Elon Musk. Responding to the post, Musk wrote: "Do you sell cars?" Defending its ad on social media, the brand's official account responded to some complaints and questions with vague answers. "The story is unfolding. Stay tuned" and "Think of this as a declaration of intent," were two of the responses made to puzzled X users.
GE, Boeing, and NASA Will Model Concept Engine Performance
GE Aerospace is coordinating its development of an energy-efficient jet engine into research with Boeing, NASA, and Oak Ridge National Laboratory, to model its performance and evaluate the results. The U.S. Dept. of Energy awarded 840,000 supercomputing hours to the Open Fan engine research project through its INCITE program, which provides “computationally intensive” resources to independent research efforts.
An "open fan” (or "open rotor”) engine involves a large, counter-rotating fan operating without a surrounding duct or nacelle, which allows a higher bypass ratio and theoretically improved fuel efficiency compared to a turbofan engine design. GE’s Open Fan is said to be the “most promising” technology developed by GE’s CFM International joint venture through its Revolutionary Innovation for Sustainable Engines (RISE) technology demonstration program, the focus of which is developing advanced engine architectures, compact core, and hybrid electric systems that are compatible with 100% sustainable aviation fuel. The GE/Boeing/NASA team research plan is to replicate a full-size Open Fan engine as installed for a Boeing commercial jet, simulate actual effects of flight, and evaluate the engine performance using supercomputing resources made available by DOE.
Read more at American Machinist
SpaceX Completes Sixth Starship Flight, Splashes Down Both Booster And Spacecraft
SpaceX launched the sixth test flight of its Starship rocket on Tuesday, as the company looks to keep up momentum of the mammoth vehicle’s development. The rocket took off from SpaceX’s private “Starbase” facility near Brownsville, Texas. There were not any people on board the Starship flight. SpaceX has flown the full Starship rocket system on six spaceflight tests so far since April 2023, at a steadily increasing cadence. Its previous launch last month featured the dramatic first catch of the rocket’s more than 20-story tall booster.
Starship reached space and traveled halfway around the Earth before reentering the atmosphere and splashing down in the Indian Ocean. SpaceX had aimed to return the rocket’s “Super Heavy” booster after it separated from Starship and land it on the arms of the company’s launch tower. But SpaceX said during its webcast that the booster did not clear its “commit criteria” needed for the catch attempt, so the booster splashed down in the Gulf of Mexico instead.