Member Briefing October 24, 2022

Posted By: Harold King Daily Briefing,

CEOs Take Different Strategies to Navigate High Inflation

High levels of inflation in the U.S. and shifts in underlying demand are putting the spotlight on the strategies executives are taking to navigate a global economy where costs are rising and consumer appetite for some products has waned. With a fifth of the S&P 500 index already reporting, data-provider Refinitiv projects quarterly earnings will decline 3.5% from a year ago, excluding the energy sector. Companies are taking different tacks to manage the pressures on their businesses.

P&G is spending on high-profile advertising campaigns and new product features to keep cash-crunched consumers from switching to cheaper brands. Verizon and AT&T Inc. both raised prices on some of their cellphone plans over the summer. Whirlpool isn’t turning to discounting to move unsold fridges and dishwashers. Instead it slashed production by 35% to shrink inventories. Fastenal Co. has been raising prices to offset rapidly rising costs, but the recent quarter showed signs of some resistance from customers.

Read more at the WSJ

War in Ukraine Headlines

China's Xi Clinches Third Term, Packs Leadership with Loyalists

China's Xi Jinping secured a precedent-breaking third leadership term on Sunday and introduced a top governing body stacked with loyalists, cementing his place as the country's most powerful ruler since Mao Zedong. Xi is the son of a Communist Party revolutionary who has taken China in a more authoritarian direction since rising to power in 2012.

Shanghai Communist Party chief Li Qiang followed Xi onto the stage at the Great Hall of the People as the new Politburo Standing Committee was introduced, putting him in line to become premier when Li Keqiang retires in March. The other members of the seven-man Standing Committee are Zhao Leji and Wang Huning, who return from the previous committee, and newcomers Cai Qi, Ding Xuexiang and Li Xi. Li Qiang is also new to the Standing Committee. All are seen by analysts to have close allegiance to Xi,

U.K. Begins Process to Select Prime Minister – Johnson Pulls Out

The contest to become Britain’s fourth prime minister in four years has been accelerated to take only a week. Under the rules, only three candidates will be able to reach the first ballot of lawmakers this afternoon, with the final two put to a vote of party members for a result by next Friday. With nominations well under way, Rishi Sunak was in the lead, having already passed the 100 threshold, followed by Boris Johnson and Penny Mordaunt. Former defence minister Penny Mordaunt became the first candidate to officially declare an intention to run to be the next leader of the Conservative party, but Rishi Sunak, led potential contenders as candidates canvassed support.  Late Sunday Johnson removed himself from consideration saying it is “not the right time” for him to make another bid for Downing Street.

But what happens next? As the party prepares to choose its third leader in little more than six weeks, here’s a step-by-step guide to the process.

Read more at the Guardian

US COVID – Plateauing

The US CDC is reporting 96.8 million cumulative cases of COVID-19 and 1.06 million deaths. Daily incidence continues to decline, down to 37,052 new cases per day, the lowest average since mid-April. Average daily mortality also continues to decline, down to 323 deaths per day on October 18. Both new hospital admissions and current hospitalizations continue to exhibit downward trends, with decreases of 1.8% and 3.3%, respectively, over the past week. Both trends peaked around the end of July, although the decreasing trend appears to be leveling.

The BA.5 sublineage continues to be the dominant strain in the US, accounting for 67.9% of sequenced specimens; however, its estimated prevalence has decreased for 8 consecutive weeks. Notably, the BA.4.6 sublineage (12.2%) appears to be losing its growth advantage to others, including BQ.1 (5.7%), BQ.1.1 (5.7%), and BF.7 (5.3%). BA.2.75.2 (1.4%) and BA.2.75 (1.3%) also show relative growth advantage over BA.5.

Read more at The Johns Hopkins Center for Health Security


The Governor updated COVID data through September October 21.


  • Daily: 26
  • Total Reported to CDC: 74,718


  • Patients Currently in Hospital statewide: 2,806
  • Patients Currently in ICU Statewide: 286

7 Day Average Positivity Rate - Cases per 100K population

  • Statewide 6.37%    -   19.62 positive cases per 100,00 population
  • Mid-Hudson: 6.58%   -   18.36 positive cases per 100,00 population

Useful Websites:

NY-19: Real Clear Politics Moves Molinaro, Riley Race to “Leans Republican” from “Toss Up”

Riley worked as an aide to then-U.S. Rep. Maurice Hinchey, D-N.Y., and as an analyst in the U.S. Department of Labor. He also served as general counsel for then-U.S. Sen. Al Franken, D-Minn., on the Senate Judiciary Committee before going into private practice. Molinaro is Dutchess County Executive, former NYS Assemblyman and was the Republican Candidate for Governor in 2018. According to a Spectrum News/Siena College Poll released earlier this month, Riley holds a lead over Molinaro 46% to 41%, the poll forecasts. The survey's margin of error is 5%, and 11% of the 470 likely voters said they were undecided or had no opinion on the race.

Saturday afternoon the Real Clear Politics poll changed is rating of the race from “toss up” to “leans Republican.”

Read more at The Center Square

NY–18: Pat Ryan, Colin Schmitt Talk Housing, Abortion, Migrant Flights in Spectrum News 1 Debate

The winner of the race in New York's 18th Congressional District could determine the balance of power in the House of Representatives in the coming November elections and Spectrum News 1 hosted the only televised debate in the race at Marist College on Tuesday. Democratic Rep. Pat Ryan is facing off against Republican state Assemblyman Colin Schmitt.

Both candidates come from military backgrounds. Schmitt as a member of the National Guard and Ryan as a retired Army intelligence officer. This is where their campaigns see the biggest parallels.

Read more at Spectrum News

Just 40% of New Yorkers Have Gotten a First COVID-19 Booster

Just 40% of eligible New Yorkers in the city and roughly 41% of the population statewide have received any additional booster shot. The lagging booster rates aren’t anything new, but they come amid an uptick in cases in some New York City neighborhoods, colder months approaching, and, on the brighter side, an updated bivalent COVID-19 shot that is recommended for its protection against the Omicron variants. As of Wednesday afternoon, a total of 476,221 COVID-19 bivalent immunizations had been administered in New York City, according to the health department.

New York has among the highest vaccination rates in the country, with 93% of the total population receiving at least one primary vaccine dose, and 79% of the population completing the primary vaccine series, according to state data. But uptake of boosters, which the U.S. Centers for Disease Control and Protection recommend for most people to be up-to-date on vaccination, is roughly half that.

Read more at City & State

Inflation Causes IRS to Raise 2023 Contribution Limits for 401(k)s, IRAs

The employee contribution limit for 401(k) and similar workplace plans will jump $2,000 to $22,500 for 2023, the largest increase ever in terms of dollars and percentage, according to benefits provider Milliman. The amount taxpayers can contribute to an individual retirement account will be $6,500 for 2023, up from $6,000. The limit hasn’t changed since 2019.

The 401(k) catch-up contribution amount allowed if you’re 50 or older will rise $1,000 to $7,500 for 2023. The catch-up contribution limit for individual retirement accounts, which isn’t subject to inflation adjustments, remains at $1,000. For workers at companies that allow special after-tax contributions, and self-employed folks who have individual 401(k)s or SEP retirement plans, there is a total $66,000 plan contribution limit for 2023, up $5,000 from this year. That includes employee and employer contributions. With catch-up contributions on top, older savers can contribute up to $73,500 in 2023 to these plans.

Read more at CNBC

Court Blocks Student Loan Forgiveness Scheme,

A federal appeals court has temporarily blocked President Biden’s student loan forgiveness program. The U.S. Court of Appeals for the 8th Circuit issued a stay on the program Friday after an appeal from six Republican attorneys general representing GOP-led states. The ruling came the same week that the Department of Education officially launched the aid application website. The lawsuit from the six states is one of a few legal challenges against the plan. 

White House press secretary Karine Jean-Pierre said in a statement after the ruling on Friday that the order does not stop eligible borrowers from applying for relief, nor does it prevent the government from reviewing applications and preparing them to be transmitted to loan servicers. The stay stops the Biden administration from moving forward in granting the relief until the appeals court issues a ruling on the merits of the case.

Read more at The Hill

U.S. Home Sales Dropped for Eighth Straight Month in September

Sales of previously owned homes declined 1.5% in September from the prior month to a seasonally adjusted annual rate of 4.71 million, the weakest rate since May 2020, the National Association of Realtors said Thursday. September sales fell 23.8% from a year earlier. Existing-home sales have dropped 27% from their recent peak in January as the Federal Reserve’s actions to increase interest rates have pushed many prospective home buyers out of the market.

Some buyers no longer qualify for mortgages at current rates, while others have stepped back from the market due to broader uncertainty about the economy, real-estate agents say. Many current homeowners have mortgage rates below 4%, and some prospective sellers are opting to stay put rather than sell their homes and buy new ones with higher borrowing costs. The average rate on a 30-year fixed-rate mortgage was 6.94% this week, up from 3.09% a year earlier, housing-finance agency Freddie Mac said Thursday.

Read more at the WSJ

U.S. Weekly Jobless Claims Fall

Initial claims for state unemployment benefits fell to a seasonally adjusted 214,000 for the week ended Oct. 15, the Labor Department said on Thursday. Data for the prior week was revised to show 2,000 fewer applications filed than previously reported. Economists polled by Reuters had forecast 230,000 applications for the latest week. The claims report showed the number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 21,000 to 1.385 million in the week ending Oct. 8.

The government reported earlier this month that job openings dropped by 1.1 million, the largest decline since April 2020, to 10.1 million on the last day of August. But economists do not expect widespread layoffs, saying companies were wary of releasing their workers after difficulties hiring in the past year as the COVID-19 pandemic forced some people out of the workforce, partly due to prolonged illness caused by the virus.

Read more at Reuters

September Jobs Report: Hudson Valley Added 34,700 Jobs Year on Year

Private sector jobs in the Hudson Valley rose by 34,700 or 4.6 percent, to 795,700 over the year in September 2022.  Job growth in the region’s private employment sector continued to be broad-based with seven of nine sectors adding jobs.  Two sectors posted year-over-year job gains of at least 8.6 percent.  The region’s professional and business services sector grew the fastest, year-over-year, up 8.8 percent – a record high for the month. 

Job gains were largest in professional and business services (+9,800), educational and health services (+8,800), leisure and hospitality (+7,200), natural resources, mining and construction (+3,800), trade, transportation and utilities (+3,300), other services (+3,000) and manufacturing (+300).  Losses were centered in financial activities (-1,500).

Read the Report

Advancing Hypersonics Materials at Warp Speed

Beyond supersonic is hypersonic. And producing vehicles that can not only fly but do so robustly at that speed—4,000 miles per hour and faster—is the next and most critical challenge facing our warfighters, and therefore the U.S. industrial base.

A key challenge in producing those hypersonics vehicles is developing the materials that will enable maximum performance in the incredibly hot and unforgiving environments of Mach 5 and beyond. One can imagine the challenges hypersonics materials encounter moving fast enough to make it from St. Louis to Honolulu in under an hour. As such, it is critically important to identify, then model and simulate, new and better materials and manufacturing processes—new ways of making things and how to model them predictively in the harsh environments that they will experience during their use—in turn accelerating the translation of ideas and research to the factory floor, into commercialization and into the hands of our defenders.

Read more at IndustryWeek

Tesla Q3 Profits Double, Musk Sticks to 50% Growth Target

Austin-based Tesla produced net income of $3.3 billion in the three months ended Sept. 30, double its profits in the prior-year quarter. Sales climbed to $17.8 billion from $11.4 billion in Q3 2021 and $13.7 billion in the second quarter of this year while operating profits rose 84% year over year.

Tesla’s operating margin finished Q3 at 17.2%, up from 14.6% in the spring. CFO Zachary Kirkhorn said spending on ramping up Tesla’s plants in Austin and Berlin as well as high costs—of raw materials and logistics but now also including the effects of the strong dollar—kept a lid on further gains in that metric.

Read more at IndustryWeek

Nucor and Alcoa Execs Keep Eye on Big Picture Amidst “Fuzzy” Outlook

Reflecting a slowing economy, executives of metals makers Nucor Corp. and Alcoa Corp. reported third-quarter results that missed estimates due to slipping demand and lower prices. But both leadership teams also told analysts they’re confident in the mid-term prospects for their businesses because of broader investment tailwinds.

Nucor said the company finished the three months ended Sept. 30 with net income of $1.7 billion, down from $2.1 billion in the same period of 2021, as sales ticked up slightly to $10.5 billion but energy costs climbed 16%. Overall shipments fell 10% to 5,869 tons with the company’s two largest segments, sheet and bars, seeing volumes slip 4% and 8%, respectively. At Alcoa, Q3 produced a net loss of $746 million that included $626 million in charges related to pension settlements. The company’s adjusted EBITDA fell 77% to $210 million due to both falling aluminum and alumina prices and higher input costs. Third-party aluminum shipments fell 14% year over year while alumina shipments were down more than 7%.

Read more at IndustryWeek

Defense Firms Outsource Sub, Carrier Construction Amid Labor Woes

The U.S. Navy is pouring billions of dollars into shoring up the companies that help build nuclear-powered submarines and aircraft carriers. But these companies, and especially prime contractors General Dynamics Electric Boat and HII’s Newport News Shipbuilding, cannot hire enough people to keep up with demand. So they’re outsourcing work that was previously done in-house, two admirals said.

Rear Adm. Jon Rucker, the program executive officer for attack submarines, said the Navy is committed to $2.4 billion from fiscal 2023 to fiscal 2027. These funds cover supplier development, workforce development, shipbuilder infrastructure, the development of technologies such as additive manufacturing and nondestructive testing, government oversight, and strategic outsourcing. Rucker said companies across the U.S. are building structural pieces of submarines, including some large modules, that were previously built at Electric Boat and Newport News facilities. Now they’re constructed by companies with available workers and space, and then shipped to the shipyard for assembly.

Read more at the Military Times