Member Briefing November 29, 2023
Home Prices Hit Fresh Record in September
The S&P CoreLogic Case-Shiller National Home Price Index, which measures home prices across the nation, rose 3.9% from a year earlier in September, compared with a 2.5% annual increase the prior month. The September level was the highest since the index began in 1987. On a month-over-month basis, the index rose a seasonally adjusted 0.7% in September. The median existing-home sale price rose 3.4% in October from a year earlier to $391,800, according to the National Association of Realtors. Home prices rose to a new record in September due to a shortage of homes for sale, even as high interest rates made home purchases less affordable.
A separate measure of home-price growth by the FHFA also released Tuesday found a 6.1% increase in home prices in September from a year earlier. The FHFA index rose 0.6% in September from the prior month on a seasonally adjusted basis. Mortgage rates have declined in recent weeks after hitting two-decade highs in October.
War in Israel Headlines
- Israel and Hamas: The Latest News – The Guardian
- Negotiators Press for Long-Term Israel-Hamas Truce - WSJ
- Democrats Want 'Conditions' on Israel - NBC
- Greta Thunberg Chants ‘Crush Zionism’ Outside Israeli Embassy in Stockholm – National Post (Canada)
- Israel, Hamas Hold Fire for Fifth Day, More Hostages Set to Be Released – Reuters
- Disease Could Become Bigger Killer Than Bombs In Gaza, WHO Warns - Forbes
- US Warns Ships of Evolving Threats After Attacks in Red Sea – The Hill
- Father Describes How His Young Daughter Emily Hand Survived Hamas Captivity - CNN
- The Nightmare for the Freed Israeli Hostages is Far From Over – The Hill
- Interactive Map- Israel’s Operation in Gaza – Institute for the Study of War
- Map – Tracking Hamas’ Attack on Israel – Live Universal Awareness Map
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Russian Court Extends Detention of WSJ Reporter Evan Gershkovich - WSJ
- Stalemate Best Describes the State of War in Ukraine - Politico
- Ukraine Spy Chief's Wife Marianna Budanova Ill in Suspected Poisoning - BBC
- Finland Shuts Border With Russia - Politico
- Russia Offered to End its Invasion of Ukraine if it Dumped Plans to Join NATO - Business Insider
- 'At What Cost?' Ukraine Strains to Bolster its Army as War Fatigue Weighs - Reuters
- Putin Hijacks Israel-Gaza War to Fuel Tensions in the West – Politico
- Ukraine and Russia Hit by Snowstorms and Floods - CNN
- 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
Conference Board: US Consumer Confidence Rose in November
The consumer confidence index increased in November to 102, the Conference Board reported, ahead of economists’ expectations for 100.9, according to FactSet, and October’s revised reading of 99.1. This reverses three consecutive months of decline in confidence. The gains in confidence stemmed from a slightly better outlook in future economic conditions. The expectations index, which is based on consumers’ short-term outlook for business, income, and labor market conditions, rose to 77.8 in November from 72.7 in October.
Despite the improvement, the index remains below 80 for a third month in a row – a level that historically signals recession within the next year, according to the Conference Board. Respondents are still preoccupied with rising prices, followed by geopolitical conflicts and higher interest rates, according Dana Peterson, chief economist at the Conference Board. November’s results remain consistent with the “short and shallow” recession the Conference Board is still anticipating in the first half of 2024.
Panama Canal is So Backed Up and ‘Unreliable’ That Ships Are Detouring Thousands of Miles to Avoid Costly Delays
The Panama Canal has become so backlogged that the world’s largest operator of chemical tankers has decided to reroute its fleet to the Suez Canal. London-based Stolt-Nielsen, which has a tanker division with 166 ships, is charging customers additional costs for the longer route, it said in an email. A bottleneck at the Panama Canal due to low water levels has prompted shippers to divert to Suez, the Cape of Good Hope, or even through the Strait of Magellan off the tip of South America.
The Panama Canal Authority, which normally handles about 36 ships a day, announced on Oct. 30 that it will gradually reduce the number of vessels to 18 a day by Feb. 1 to conserve water heading into the dry season. Panama had the driest October on record due to a drought caused by the El Niño weather phenomenon, the authority said. It’s unlikely that the canal will be able to increase traffic until the rainy season starts in mid-2024, according to experts. Some ships have had to wait as long as 20 days to get through the canal this year. Stolt said other shippers are “taking a similar approach” to deal with the backlog at the canal.
COVID 19 News - COVID Variant BA.2.86 Triples in New CDC Estimates, Now 8.8% of cases
Nearly 9 percent new COVID-19 cases in the U.S. are from the BA.2.86 variant, the Centers for Disease Control and Prevention estimated Monday, nearly triple what the agency estimated the highly mutated variant's prevalence was two weeks ago. Among the handful of regions with enough specimens reported from testing laboratories, BA.2.86's prevalence is largest in the Northeast: 13.1% of cases in the New York and New Jersey region are blamed on the strain. Monday's figures mark the first time BA.2.86's prevalence has surged enough to be listed as a standalone variant on the CDC's estimates.
Early data on BA.2.86 suggests it does not appear to lead to worse or different symptoms than previous strains, the WHO said in its Nov. 21 risk evaluation, but noted a "substantial rise" in recent BA.2.86 reports. The CDC said it did not disagree with the WHO's assessment that BA.2.86 likely posed a "low" public health risk, adding that for now the strain "BA.2.86 does not appear to be driving increases in infections or hospitalizations in the United States."
Senate Races to Finish Border Talks, Pass Ukraine, Israel Aid
For several weeks, a bipartisan group of senators has been working to strike a deal that would secure enough GOP support. Sen. Thom Tillis (R., N.C.), one of the lead negotiators, said talks on tightened asylum rules are making progress, but Republicans and Democrats remain farther apart on a GOP demand to rein in a separate immigration power known as humanitarian parole, which allows the president to temporarily let immigrants into the country who don’t otherwise qualify for a visa.
Sen. Thom Tillis (R., N.C.) said enough Republican senators are prepared to vote against advancing the emergency spending package next week—enough to block it—unless it includes border security provisions that a majority of the Senate Republican conference considers acceptable. House Speaker Mike Johnson (R., La.) said Monday that Ukraine aid is an urgent priority. But he stressed that it can’t pass without border policy changes. The emergency aid package is one of several items on Congress’s to-do list before the end of this year, with a Dec. 31 deadline to pass a $886 billion defense-policy bill and reauthorize the operations of the Federal Aviation Administration among them.
Vehicles and Parts Drive Mexico’s Exports of Manufactured Goods Up 5.3% in October
Mexico registered a $252.5 million trade deficit in October compared with a $2.09 billion gap in the year-earlier month, with growth in exports outpacing that of imports. Exports last month increased 5.6% from October 2022 to $51.97 billion, the National Statistics Institute said Monday. Imports rose 1.8% to $52.23 billion. Petroleum exports rose 14% to $3.19 billion on higher crude export volume and prices, and exports of manufactured goods grew 5.3% to $46.38 billion, led by an almost 21% rise in shipments of vehicles and auto parts.
Petroleum imports, which include gasoline, diesel and natural gas, fell about 25% from a year earlier to $3.97 billion. Consumer goods imports excluding fuels were up almost 30% at $6.87 billion, and imports of equipment and machinery rose more than 19% to $5.14 billion. Imports of intermediate goods, such as components used in manufacturing, were down 0.3% excluding petroleum at $36.24 billion.
Amid Global Supply Chain Shifts, China Eyes Vietnam for ‘Strategic’ Cooperation
Manufacturing heavyweights China and Vietnam have stepped up talks toward improving economic ties that could give Chinese railway contractors and hi-tech firms, among others, a stronger hold in the Southeast Asian country. Chinese Minister of Commerce Wang Wentao told Vietnamese Prime Minister Pham Minh Chinh on Saturday in Ho Chi Minh City that the neighbors should cooperate on “interconnection”.
Vietnam and China have disputes over parts of the South China Sea, sometimes leading to maritime stand-offs, but relations have improved in recent years. China registered US$2.92 billion in direct investment in Vietnam over the first nine months of the year, 94.9 per cent higher than in the first three quarters of 2022, according to Vietnam’s Ministry of Planning and Investment.
Read more at the South China Morning Post
Malls Aren’t Dead. They’re in Transition.
For years now, people have been talking about the death of malls. But many have been doing well — even better than they were pre-pandemic. The ones that are finding renewed success are often going back to the reasons why malls were invented in the first place.
Southdale Center in Minnesota was the first indoor mall in the country. It opened in 1956, when suburbia was growing. The shopping center had clothing stores. But it also had European-style sidewalk cafes (minus the sidewalk). An orchestra even held balls there. The idea was to create a place where the community could escape from the freezing Minnesota winter and socialize without the fuss of going downtown. Michael Burayidi, an urban planning professor at Ball State University in Indiana. said the mall needs to go back to its original vision as a multipurpose place. “Not just a place to buy things, but also a place where you can socialize, where you can have an experience.”
Lexus, Toyota to Adopt Tesla Production Method for Next EVs
Toyota’s battle to catch up with Tesla in a new era of electric vehicles is playing out in one of the oldest parts of the carmaking business: the assembly line. Toyota is being challenged by Tesla on the factory floor, where the world’s most valuable carmaker is pioneering a fundamental change to the way cars are made. Tesla chief executive Elon Musk argues that legacy assembly processes need to be changed for battery-powered vehicles, simplifying and speeding up carmaking with fewer suppliers and vehicle models.
Some car executives and analysts expect Tesla’s process — which Musk calls “gigacasting” — to set a new benchmark for building vehicles, replacing the vaunted Toyota Production System based on just-in-time manufacturing efficiency. “The way Toyota builds cars has been considered the standard but it’s extremely shocking to think that what Tesla is proposing is likely to become the standard for producing EVs. The impact on Japan’s car manufacturing will be monumental,” said Takaki Nakanishi, a veteran automotive analyst who runs his own research group.
Read more at The Financial Times
N.Y. Cannabis Board Settles Suits, Paving Way for Dispensaries to Open
New York’s Cannabis Control Board voted Monday to accept a settlement in two lawsuits challenging the legality of the licensing program that launched the state’s recreational cannabis industry. One of those lawsuits resulted in an injunction against the program in August, forcing the slow legal roll-out to screech to a halt.
The case that led to the injunction was brought by four service-disabled veterans who objected to the state’s Conditional Adult Use Retail Dispensary program, a social equity initiative that reserved the state’s first licenses for people with past marijuana convictions and their family members. The plaintiffs argued that, under New York’s Marijuana Regulation and Taxation Act, other groups, including veterans, should also have been prioritized. The state is also settling with a group of large cannabis companies that already have medical licenses in the state and are waiting on their chance to enter the recreational market. A coalition of those companies filed a lawsuit in March calling the conditional license program unconstitutional, arguing state policymakers overstepped their authority when they created it.
Sales of Toys and Games Slump as Americans Show Signs of Pulling Back
Sales of toys have slumped so far this year, down 8% through September compared with the same period last year, according to market-research firm Circana, and appeared poised to be lackluster this holiday season. Imports of toys and games have fallen sharply this year and sales at toy stores, department stores and other gift sellers declined in October, leading a broader pullback.
A retrenchment on the most fun-to-give gifts sends a signal that Americans are starting to ease their spending more broadly as pandemic savings dwindle, the labor market softens and shoppers worry about global events and still-elevated inflation. Easing consumer spending would cool overall growth, because it accounts for more than two-thirds of economic activity. Customers are “showing ongoing discretion and making trade-offs to be able to afford the things they want, given the sustained high cost of the things they need,” Walmart Chief Financial Officer John David Rainey told analysts last week.
Pentagon Looks to Commercial Space for an Edge
Deputy Defense Secretary Kathleen Hicks, who has spearheaded Pentagon efforts to bring cutting-edge technology into defense programs, is overseeing the military’s first commercial space integration strategy. The new strategy comes as the Pentagon seeks to tap into advancements in commercial space technology to maintain an advantage over China, now seen as America’s top military competitor.
The space integration strategy is being drafted by the office of the Assistant Secretary of Defense for Space Policy John Plumb. Speaking at an industry conference last month, Plumb said, “It’s an exciting time for innovation in space and there’s major opportunities for the department to leverage, like the rapid production and technology refresh rates that the commercial sector can provide.” The Pentagon’s annual report on Chinese military capabilities released to Congress last month warned that China was closing once-substantial gaps with American space technologies, increasing the possibility that Beijing could gain the upper hand in a future conflict by attacking United States satellites.
Virgin Atlantic Jet Takes Off for Maiden Transatlantic Flight on Low-Carbon Fuel
A Virgin Atlantic passenger jet powered by 100% sustainable aviation fuel (SAF) took off from London on a flight to New York on Tuesday, as the aviation world seeks to showcase the potential of low carbon options to secure its future. As the world de-carbonises, airlines are banking on fuel made from waste to reduce their emissions by up to 70%, enabling them to keep operating before electric and hydrogen-powered air travel becomes a reality in the decades to come.
Aviation accounts for an estimated 2-3% of global carbon emissions. SAF is key toward reducing those emissions, but it is costly, at about three to five times as much as regular jet fuel right now, and accounts for less than 0.1% of total global jet fuel in use today. The flight, operated by a Virgin Boeing 787 powered by Rolls-Royce Trent 1000 engines, is the first time a commercial airliner has flown long haul on 100% SAF. SAF is already used in jet engines as part of a blend with traditional kerosene, but after successful ground tests, Virgin and its partners Rolls-Royce, Boeing, BP and others won permission to fly using only SAF.
DOE Invests $169 Million In Projects to Accelerate Electric Heat Pump Manufacturing
The U.S. Department of Energy (DOE) has selected nine projects to receive a collective $169 million in funding. The projects, which will be funded by the Inflation Reduction Act, are designed to increase electric heat pump manufacturing at 15 sites across America. According to the DOE, the selected projects promised to help improve air quality, help families and businesses save money on their energy bills, and reduce energy resilience on foreign nations. The projects are expected to generate over 1,700 new jobs.
In a recent quote, U.S. Secretary of Energy Jennifer M. Granholm said, “Getting more American-made electric heat pumps on the market will help families and businesses save money with efficient heating and cooling technology. Thanks to President Biden’s Investing in America agenda, these investments will create thousands of high-quality, good-paying manufacturing jobs and strengthen America’s energy supply chain, while creating healthier indoor spaces through home-grown clean energy technologies.”