Member Briefing November 8, 2023
US Trade Gap Widens In September As Imports Rise More Than Exports
The US trade deficit expanded in September on the back of a larger rise in imports than exports, according to government data released Tuesday. The overall trade gap of the world's biggest economy broadened more than expected to $61.5 billion, up from a revised $58.7 billion in August, said the Commerce Department. This came as imports picked up 2.7 percent to $322.7 billion, while exports grew 2.2 percent to $261.1 billion.
US trade has been helped by consumer spending as households dipped into pandemic-era savings but higher interest rates, aimed at lowering inflation, have been expected to weaken demand. As growth slows in the United States' major trading partners following monetary policy tightening, exports could take a hit as well. The increase in the US September trade gap reflected a widening of the goods deficit, and a drop in the services surplus. The US goods deficit with China, a point of focus during the trade war between both countries, grew to $24.1 billion in September, data showed.
War in Israel Headlines
- Israel and Hamas: The Latest News – The Guardian
- Israel Deepens Push Into Gaza City - WSJ
- Biden Confronts Limits of U.S. Leverage in Israel and Ukraine Wars - NYT
- Iran-Backed Groups Threaten to Expand Gaza War as They Step up Attacks on Israel and U.S. - NBC
- Israel Has Only Weeks to Defeat Hamas as Global Opinion Sours, Former PM Ehud Barak Says - Politico
- Israel Says it is Open to Gaza Fighting Pauses for Aid, Hostages – Reuters
- White House Warns Israel Against Reoccupying Gaza - CNN
- Netanyahu: Israel Will Control Gaza Security Indefinitely - WSJ
- Petraeus Says Post-War Israeli Occupation of Gaza Likely ‘Inescapable’ – The Hill
- 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
- Russia Formally Withdraws From Key Post-Cold War European Armed Forces Treaty – Reuters
- Ukraine’s American-Made M-1 Tanks Have Reached The Front Line – Forbes
- U.N. Relief Chief Says Death Toll in Gaza ‘Defies Humanity’ - WSJ
- U.S. Plans $320 Million Weapons Transfer to Israel - CNN
- Seizing Russian Cash to Rebuild Ukraine Won’t be so Easy - Politico
- 'Something Was Wrong:' Ukrainians Lament Deaths at Medal Ceremony - NYT
- Top Ukrainian Military Aide Killed By Grenade In Birthday Present – Forbes
- Von der Leyen Hints at Opening EU Door for Ukraine, but Challenges Remain – Politico
- 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
EY Survey: CEOs Investing in AI Strategy But With Challenges Emerging.
Generally, CEOs globally are optimistic as they navigate a fresh phase of the global economy and an evolving external terrain. While they are enthusiastic about the prospects AI offers to create efficiencies and fuel growth, they still find themselves navigating economic headwinds and a complex geopolitical environment. CEOs globally recognize the potential of artificial intelligence (AI), but most are encountering significant challenges in formulating and operationalizing related strategies. While over two-thirds see the need to act quickly on GenAI, a similar proportion also report being stymied by uncertainty in this space, making it challenging to respond at speed. While the vast majority (9%) are planning to invest in GenAI, the investment landscape is complex.
Yet, a surge in companies claiming AI expertise complicates decisions about identifying and implementing credible value-adding ecosystem partnerships and acquisitions. This has likely contributed to acquisition appetite falling to its lowest level since 2014, with only 35% of CEOs planning mergers and acquisitions (M&A) in the next 12 months – although other factors such as geopolitical tensions are playing a significant role in the drop.
Ford's U.S. Sales Slide from Strike Impact; Toyota, Honda, Hyundai, Kia Advance in October
Ford (F.N) reported a drop in October U.S. vehicle sales, including in its highly profitable F-series pickup trucks, following a recent United Auto Workers (UAW) union strike at some of its facilities. The automaker posted a 5.3% drop to 149,938 vehicles in total U.S. sales and a 5.1% decline in F-series pickup truck sales to 53,509 units. While Ford on Thursday did not disclose any hit to its October sales from the strike, UAW members last month walked out at the company's Kentucky Truck Plant that makes the F-250 and F-550 Super Duty Trucks.
Hyundai Motor America reported total October sales of 60,805 units, a 0.3% increase compared with October 2022. This is the 15th month in a row Hyundai has seen increases in total sales. Hyundai set total sales records in October for Elantra HEV (+15%), IONIQ 5 (+89%), Santa Fe HEV (+81%), Tucson PHEV (+170%) and Tucson HEV (+14%). Toyota also reported double digit growth on a YoY basis
COVID Update – Researchers Develop a Nasal Vaccine in Preclinical Studies
A team of University of Maryland researchers developed a nasal spray vaccine that delivers the SARS-CoV-2 spike protein into cells of the airway in mice and hamsters, triggering an immune response that significantly reduced infection and spread of COVID-19. The technology can be adapted to induce immunity to other respiratory illnesses, such as influenza and respiratory syncytial virus (RSV) infections. The development was described in a research paper published in Nature Communications.
Xiaoping Zhu, professor of veterinary medicine at UMD and his team developed a technology that leverages the body's natural mechanism to transport the COVID-19 spike protein into the cells of the airway, where the local immune system can learn to recognize the virus. The mechanism they tapped into uses a protein called neonatal Fc receptor (FcRn) to carry antibodies across epithelial cells. The researchers developed and patented a technology to bind their chosen human antibody to FcRn. Then, they attached the spike protein from SARS-CoV-2 to FcRn and sprayed it into the noses of mice.
Senate Eyes Huge ‘Maxi-Bus’ to Address Year-End Spending Crunch
Senate leaders and appropriators are carefully considering a proposal to combine the remaining nine unpassed Senate appropriations bills into one large “maxi-bus” to be brought to the floor to avoid a government shutdown or long-term stopgap measure. There are only a few legislative days left until the Thanksgiving recess and only three full weeks in December before the Christmas break to get all the Senate spending bills passed and reach a deal with the House.
If lawmakers don’t get their work done, they face the prospect of a government shutdown or the passage of an extended stopgap measure that keeps government funding frozen — or possibly cuts current levels — until next year. The Senate last week passed a minibus appropriations package that combined three of the annual spending bills funding military construction and the departments of Veterans Affairs, Agriculture, Transportation, and Housing and Urban Development. But it took senators nearly seven weeks to consider that package on the Senate floor, even though the bills it included passed out of the Appropriations Committee with unanimous support.
Pfizer Cuts 781 Employees in New Jersey – Some Will be Reassigned to New York
Pfizer’s plans to close one of its New Jersey facilities could affect nearly 800 workers at its Somerset County location. The global pharmaceutical company filed a Worker Adjustment and Retraining Notification with the state indicating that up to 791 employees at the facility in Peapack and Gladstone could face layoffs by February 2024. However, Pfizer said it plans to reassign a “vast majority” of those workers to its New York office, according to healthcare news site Fierce Pharma. A “small portion” of the workers could be assigned to Pfizer’s facility in Parsippany, Fierce Pharma reported.
The cuts at Pfizer come amid declining revenue in the post-COVID-19 era. In October, the company reported third-quarter revenue of $13.23 billion, down 42% from the same period a year ago. Earlier this year, Pfizer also announced layoffs in Illinois and Colorado.
‘Alarming Sign’ as China’s October Exports Drag and Regional Rivals Prosper
China’s exports fell more than expected in October as shipments to major trading partners remained weak, in contrast with upbeat growth recorded by its regional competitors, with analysts warning of “an alarming sign” for the world’s second-largest economy. Exports declined for a sixth consecutive month in October, dropping by 6.4 per cent from a year earlier to US$274.8 billion, deeper than the fall of 6.2 per cent in September and much worse than the 3.8 per cent decrease expected by the market.
The decline underlined persistent external headwinds and clouded the overall economic recovery, although a surprisingly upbeat growth in imports brought initial signs that domestic demand may have bounced back. Vietnam, which has emerged as one of the favoured investment alternatives to China, saw its exports grow for the second month in a row after rising by 5.9 per cent in October. Japan’s exports, meanwhile, turned positive for the first time in three months in September, rising to a record high as auto shipments to the United States and Europe recovered.
Read more at The South China Morning Post
Intel is Leading Candidate to Get Billions for Defense-Chip Facilities
Shares of Intel Corp. were up more than 1% in extended trading Monday following a report the chip maker is the front-runner to land billions of dollars in funding for secure facilities producing microchips for U.S. military and intelligence applications. The as-yet unannounced facilities are intended to reduce the U.S. military’s reliance on chips imported from East Asia, particularly Taiwan, which some say is vulnerable to Chinese invasion, according to a Wall Street Journal report, citing people familiar with the matter.
The operation, which could be based at Intel’s Arizona factory complex, would be funded under the Biden administration’s $53 billion Chips Act passed last year, the Journal reported. Officials from the Commerce Department, the Office of the Director of National Intelligence and the Defense Department are negotiating the project with Intel and haven’t made a final decision, according to people familiar with the discussions.
U.S. Chipmakers Descend on China Import Fair Despite Tech Curbs
The number of U.S. semiconductor companies taking part in China's import fair rose this year despite Washington's restrictions on technology exports, signaling a strong appetite on both sides for trade in general-purpose devices. Micron Technology set up its first-ever booth at the China International Import Expo here to advertise its memory chips for artificial intelligence and other applications. A staffer expressed hope of a de-escalation in bilateral tensions.
Micron is one of the American companies hit by the tensions. Micron's orders plunged as companies that provide information technology products to Chinese local governments and state-owned enterprises began switching suppliers. The U.S. company slid into the red on a net basis in the year ended this August. Micron is now trying to improve relations with China. It announced in June that it would invest 4.3 billion yuan (about $590 million) in its plant in Xi'an, Shaanxi province.
GlobalFoundries Reports Better-Than-Expected Earnings
GlobalFoundries stock was rising early Tuesday after the contract chip manufacturer beat expectations for its third-quarter earnings. GlobalFoundries produces components for a range of semiconductor companies and said it continues to deal with excess inventory in some markets but its guidance indicated a market improvement. The company reported adjusted earnings of 55 cents a share for the third quarter, down from 67 cents for the same period a year earlier. Net revenue fell 11% to $1.85 billion.
GlobalFoundries was expected to report adjusted earnings of 50 cents a share on revenue of $1.85 billion, according to a FactSet poll of analysts’ estimates. GlobalFoundries said it expects adjusted earnings of between 53 cents and 64 cents for the fourth quarter on revenue in a range of $1.83 billion to $1.88 billion. Analysts had expected earnings of 53 cents and revenue of $1.89 billion, according to FactSet.
Amazon Founder Jeff Bezos Is Leaving Seattle for Miami
After nearly three decades in the Seattle area and some two years after stepping down as CEO of Seattle-based Amazon, Jeff Bezos is leaving the Pacific Northwest for Miami, he announced Thursday on Instagram. The world’s third richest person has purchased two homes on Indian Creek, Miami-Dade County’s luxury island community, in the past five months, snapping up a $68 million mansion in an off-market transaction in June and a $79 million pad right next door in October.
In March, the Washington Supreme Court upheld the state’s 7% tax on capital gains above $250,000. Bezos’s roughly $160 billion fortune resides Mostly in unrealized capital gains in Amazon stock. Florida doesn’t tax capital gains. And by the way, Washington also has an estate tax that goes from 10% to 20% on estates over $2.19 million. Florida does not. The Bezos estate’s estimated savings: $32 billion. In discussing the move, Bezos said: 1. He loves Miami; 2. He wants to be closer to his parents, who recently moved there; and 3. The operations of Blue Origin are “increasingly shifting to Cape Canaveral.”
EV Makers Turn to Discounts to Combat Waning Demand
As sales growth has slowed for battery-powered models, automakers and dealers are slashing prices and piling on discounts to clear out unsold inventory. Some automakers, such as Hyundai Motor HYMLY 0.00%increase; green up pointing triangle and Ford Motor F -2.37%decrease; red down pointing triangle, are this month offering cash rebates as high as $7,500 on some models. Others are resorting to aggressive lease deals that offer cheaper monthly payments or shorter contract lengths to attract buyers. Many car companies are offering low-interest rate promotions in an attempt to make pricey EVs more affordable.
Market leader Tesla TSLA -0.31%decrease; red down pointing triangle has slashed prices this year across its lineup, reducing the starting price of some models by roughly a third. Ford Motor has also marked down its Mustang Mach-E SUV at least two times this year. For consumers such promotions can be a boon, helping to shrink the price difference between an EV and a traditional gasoline vehicle. But it is another sign that the once-hot market for these models is losing its charge.
Skills-Based Hiring: An Equalizing Shift in Frontline Hiring is Underway
Do you need to require a resume and cover letter for an assistant line cook who is setting up the prep station, stocking inventory, and maintaining sanitation standards? Or would a short Q&A about background experience in restaurants be more telling? It’s this kind of strategic changes that many companies are considering. Instead of focusing on a time-consuming approach traditionally used to recruit corporate workers, many organizations are moving toward a more skills-based approach to hiring. It’s a strategy that is better for candidates applying for these jobs and also helps the companies achieve major talent pipeline goals: timely hiring, equity, and longevity.
Companies looking to move toward a more skills-based hiring strategy should consider four key steps: (1) reviewing job descriptions, (2) integrating assessments, (3) conducting interactive interviews, and (4) training your recruiting team. Job descriptions are an organization’s welcome mat; each should clearly outline the skills required for success and include language that indicates openness to training candidates with enthusiasm. As a best practice, standardizing skills across all job openings for the company can create greater consistency in hiring practices.
Hydrogen is Becoming the ‘Big Tent’ Clean Energy Solution
Many Republicans have railed against the government’s subsidies for wind and solar, excoriated its support for electric vehicles and decried moves to curb oil and gas. But one clean-energy candidate has broad support from some of the reddest parts of the U.S.: hydrogen. Hydrogen is one of the most common elements on earth, but it nearly always appears in compounds such as water or methane. Separating it out into pure form takes a lot of energy.
In a polarized energy debate that often pits renewables and their Democratic backers against fossil fuels and Republican interests, hydrogen is emerging as a big-tent fuel. Hydrogen doesn’t produce carbon emissions when burned, and companies are looking at it for use in cars, power generation and steel manufacturing. One feature is that it can be produced using either renewables or fossil fuels. Many environmentalists warn that the flexibility could end up hurting the climate by prolonging the use of oil and gas. But it is also a reason for hydrogen’s bipartisan appeal.
Nike Sues New Balance, Skechers for Patent Infringement Over Sneaker Technology
Footwear giant Nike filed federal lawsuits on Monday against rivals New Balance and Skechers, accusing them of infringing patents related to Nike's technology for making upper portions of sneakers. The lawsuits said that several New Balance athletic shoes and Skechers sneakers misuse Nike's patented "Flyknit" technology for running, soccer and basketball shoes. Nike has previously sued Adidas, Puma and Lululemon for infringing Flyknit patents. Adidas and Puma have settled their lawsuits, while Nike's case against Lululemon is still ongoing.
New Balance said in a statement that it "fully respects competitors' intellectual property rights, but Nike does not own the exclusive right to design and produce footwear by traditional manufacturing methods that have been used in the industry for decades."