Member Briefing October 8, 2024
U.S. Crude Oil Jumps More Than 3%, Trades Near $77 As Market Waits For Israel Strike Against Iran
U.S. crude oil jumped more than 3% on Monday, as the market waited for Israel to strike Iran. Oil prices spiked last week on fears that Israel could hit Iran’s oil industry in retaliation for Tehran’s ballistic missile attack. U.S. benchmark West Texas Intermediate surged 9.09% last week for the biggest weekly gain since March 2023. Global benchmark Brent jumped 8.43% for the largest weekly advance since January 2023.
It’s still unclear what form Israeli retaliation will take, said Helima Croft, head of global commodity strategy at RBC Capital Markets. The impact on the oil market would be significant if Israel struck Kharg Island, through which 90% of Iran’s crude exports pass, Croft said. The market right now is only pricing in the possibility of Israel striking Iran’s oil facilities but that is not the worst-case scenario, Alan Gelder, vice president of oil markets at Wood Mackenzie, told CNBC’s “Squawk Box Europe” on Monday. The worst-case scenario is a disruption in the Strait of Hormuz, through which 20% of the world’s crude exports flow, Gelder said. Iran might target the strait in response to an Israeli strike, which would have a far more dramatic effect on crude prices, the analyst said.
10-Year Treasury Yield Rebounds Back Above 4%
The 10-year Treasury yield, a benchmark for mortgages and car loans, jumped back above 4% on Monday amid stronger labor market readings and despite the start of a Federal Reserve rate-cutting campaign last month. The 10-year yield was up nearly 4 basis points to 4.018%, its highest since early August and a big turnaround from its 2024 low of around 3.58% reached a little more than a month ago. The yield on the 2-year Treasury was up 5 basis points to 3.985%. Yields move inversely to prices. One basis point equals 0.01%.
Investors believe the rebound in rates is due mostly to a resetting of rate-cut expectations. To be sure, rising oil prices due to geopolitical tensions in the Middle East and a stimulus plan in China are also raising some concern about inflation reigniting, perhaps driving some investors away from bonds and raising yields. September’s CPI reading is out on Thursday.
Talent Issues — Not Technology — Make Up Half Of Manufacturers’ Top Challenges
Among the top 10 workforce challenges facing manufacturers today, 50% involve people-related concerns rather than technology, according to a Sept. 24 report from global technology intelligence firm ABI Research. Manufacturing decision-makers highlighted issues such as recruiting quality staff, boosting staff retention and improving workforce skills. Manufacturers reported concerns such as staff being more likely to be trade union members and wage expectations among new recruits.
“Recruiting, retaining and upskilling staff are among the top challenges manufacturers face today,” Michael Larner, a distinguished analyst at ABI Research, said in a statement. “Skilled individuals are required to operate and maintain equipment while also focusing on optimizing production lines. Simply put, there aren’t enough of these individuals in the workforce today.” In a survey of 461 manufacturing decision-makers in the U.S., Germany and Malaysia, 69% said a lack of expertise prevents digitalization at their company. Respondents listed staff training among the top investment areas for the next year to improve productivity and quality
Read more at Manufacturing Dive
Global Headlines
Middle East
- Israel And Hamas: The Latest News – The Guardian
- War Rages On Multiple Fronts As Israel Marks A Year Since Hamas’ Oct. 7 Attack - AP
- Hezbollah’s Fatal Miscalculations - Politico
- Trauma Of Oct 7 Attack Still Hangs Over Israel As War Spreads – Reuters
- American Sympathy For Israel Has Plunged Since October 7 Attack - Newsweek
- Israeli Army Conducts 'Extensive' Air Strikes Across Southern Lebanon – France 24
- Hezbollah Missiles Hit Israel's Haifa In Escalating Conflict - Reuters
- Gaza Strip In Maps: How A Year Of War Has Drastically Changed Life In The Territory - BBC
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Ukraine And Russia: The Latest News – The Guardian
- Putin’s ‘Merchant Of Death’ Is Back In The Arms Business. This Time Selling To The Houthis. - WSJ
- Ukraine Agents Sabotaged Russian Minesweeper On 'Nato Lake' - Newsweek
- Ukraine Strikes Oil Depot In Occupied Crimea - BBC
- Ukraine Will Never Join Nato On My Watch, Says Slovakia Pm Fico - Politico
- Ukraine Says Russian Missile Strike Damaged Vessel Carrying Grain In Pivdennyi Port - Reuters
- Russian Court Sentences A 72-Year-Old American To Nearly 7 Years In Prison For Fighting In Ukraine - AP
- 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
- Russia Set To Remove Taliban From Terrorist List, Says Putin’s Envoy - Politico
- Nobel Peace Prize Could Be Cancelled Due To Global Conflict: Expert - Newsweek
- Osaka Airport Finds Room For 15m More Flyers By Shortening Lines – Nikkei Asia
- Vietnam Q3 Gdp Growth Rockets 7.4%, Highest In 2 Years – Nikkei Asia
- Haiti's Divided Transition Council In Dispute Over New President - Reuters
- Asteroid Mission Aims To Save Humans From The Fate Of The Dinosaurs – Politico
- Chinese Hackers Breached Us Court Wiretap System - Reuters
- Bolsonaro's Right-Wing Party Makes Significant Gains In Brazil's Municipal Elections – France 24
- French Factory Production Shows Signs Of Recovery – The WSJ
Policy and Politics
New Supreme Court Session Started Monday: Here's What's On The Docket
The Supreme Court's new term begins this week. The Court is slated to hear a number of important cases, including a challenge to the Biden administration’s attempt to regulate hard-to-trace "ghost guns" and the case of Oklahoma death row inmate Richard Glossip. What’s not listed on the docket is the potential election disputes that the high court could be asked to rule on, should they occur. An August ABC News/Ipsos poll reveals two-thirds of Americans don’t believe Donald Trump will accept the outcome of the election if he loses, challenges that could end up before the Supreme Court.
Some of the bigger issues the Court will hear include - Transgender rights, Ghost guns, Death penalty, Pornography, Mexico's gun lawsuit, Nuclear waste, Job discrimination and Flavored vapes. Here’s a look at the bigger cases being heard by the Supreme Court this term:
Chronic Absenteeism Rates Increased Sharply in New York State
A new report by State Comptroller Thomas P. DiNapoli details how chronic absenteeism rates among New York public and charter school students increased sharply as schools transitioned back to in-person learning after the COVID-19 pandemic subsided and remained high with nearly one in three students chronically absent during the 2022-23 school year (SY). The rates were highest for high school students at 34.1%, 7.6 percentage points higher than elementary and middle school students.
Chronic absenteeism is defined by the U.S. Department of Education as the share of students who miss at least 10% of days (typically 18) in a school year for any reason, excused, unexcused, or for disciplinary reasons. New York state excludes suspensions and extended medical absences from the state’s chronic absenteeism calculation. Large city public schools (Buffalo, Rochester, Syracuse, and Yonkers) and charter schools had the greatest high school chronic absenteeism rates: 64.2% and 52.1%, respectively. These high schools also had the greatest increase in chronic absenteeism between SYs 2018-2019 and 2022-2023. New York City high schools had a 43.1% chronic absenteeism rate in SY 2022-2023.
Read more at The Comptroller’s website
How Leaders Can Navigate Politics At Work
Attempting to stifle political discourse in the workplace, particularly during an election year, is not only impractical but also counterproductive. Research from Harvard Business Review underscores the pitfalls of such an approach, revealing that suppressing political conversations can lead to heightened frustration and disengagement among employees. Imagine a workplace where political discussions are not met with hostility but are instead seen as a chance to bridge divides and enhance relationships. This is the essence of eunoia in action. The power of this approach lies in its ability to reframe political conversations from battlegrounds into platforms for collaborative dialogue.
When companies try to quell political debates, they often do so at the cost of increased turnover and diminished job satisfaction. The 2020 election cycle served as a case study of this phenomenon. Organizations that embraced open, respectful dialogue found themselves reaping the rewards of improved team cohesion and a more inclusive culture. In contrast, those who enforced a strict silence on political matters frequently encountered hidden tensions and reduced trust among their workforce.
Listen to Manufacturers’ stories at Smart Brief
Health and Wellness
Old Drug Repurposed for Schizophrenia Could Reap Alzheimer’s Windfall
The path to discovering a blockbuster drug is often unpredictable. A promising molecule might be overlooked for decades, only to regain attention when new scientific insights spark fresh interest from pharmaceutical companies. Such is the case with newly approved Bristol-Myers Squibb drug Cobenfy. The underlying drug was first studied in Alzheimer’s patients in the 1990s, but it was abandoned because of severe side effects. Decades later, it was repurposed for schizophrenia, and last month it was approved for use by the U.S. Food and Drug Administration, making it the first new antipsychotic to come to market in decades.
Now, it could come full circle. Bristol-Myers is studying Cobenfy’s effects in Alzheimer’s patients, and late-stage clinical trial results are expected in 2026. Cobenfy’s circuitous route to market can be traced back to an Eli Lilly study published in 1997. The idea was to investigate whether its drug, xanomeline, could provide cognitive and behavioral benefits to Alzheimer’s patients. Although the drug demonstrated promising efficacy, Eli Lilly discontinued the project because of significant side effects, such as vomiting and nausea.
Election 2024
- Manufacturing’s Election Donations: Tracking The Industry’s Biggest 2024 Donors – Manufacturing Dive
- Elon Musk Makes His First Appearance At A Trump Rally And Casts The Election In Dire Terms - AP
- From Bocce To Brawls: How Politics Tore Apart A California Retirement Community - WSJ
- Kamala Harris And Donald Trump Switch Up Campaign Strategies - Newsweek
- Walz Says He ‘Speaks Like Everybody Else.’ And It’s Not Working For The Campaign. – Politico
- Turning Point Wants To Revolutionize How Republicans Turn Out Voters. Some Are Skeptical - AP
- Harris’ Lead Over Trump Narrows In Election Betting Markets - Forbes
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Real Clear Politics Electoral Map
- Latest Polls - Fivethirtyeight
Industry News
Hurricane Milton Is A Category 5 Headed Toward Florida—Landfall Expected Wednesday
Hurricane Milton intensified into a Category 4 Hurricane over the Gulf of Mexico early Monday as it barreled toward the Florida Gulf coast, less than two weeks after Hurricane Helene left devastating flooding across parts of the southeastern U.S. According to the National Hurricane Center, Milton had maximum sustained wind speeds of 150 mph as of 9 a.m. EDT, qualifying it as a Category 4. The NHC’s earlier forecasts suggested Milton would make landfall as a Category 3 hurricane with maximum sustained wind speeds of around 120 mph on Wednesday.
The storm was about 730 miles west-southwest of Tampa as of Monday morning. Hurricane watches are in effect for parts of Mexico as well as the Florida Gulf Coast from Chokoloskee, about 90 miles south of Fort Meyers, to the mouth of the Suwanee River, including Tampa Bay. Tropical storm warnings cover much of the same area in Florida, with the addition of the Florida Keys, and a storm surge warning is in effect near Charlotte Harbor and Tampa Bay. The storm is expected to bring 5 to 10 inches of rain, with localized totals up to 15 inches, across parts of the Florida Peninsula and the Keys through Wednesday night, which could cause "considerable flash, urban, and areal flooding," according to the NHC.
Nobel Prize In Medicine Honors American Duo For Their Discovery Of MicroRNA
Two scientists won the Nobel Prize in physiology or medicine on Monday for their discovery of microRNA, tiny pieces of genetic material that alter how genes work at the cellular level and could lead to new ways of treating cancer and other diseases. The work by Americans Victor Ambros and Gary Ruvkun is “proving to be fundamentally important for how organisms develop and function,” according to a panel that awarded the prize in Stockholm.
Ambros and Ruvkun were initially interested in genes that control the timing of different genetic developments, ensuring that cell types develop at the right time. Their discovery ultimately “revealed a new dimension to gene regulation, essential for all complex life forms,” the panel said. Ambros, currently a professor of natural science at the University of Massachusetts Medical School, performed the research at Harvard University. Ruvkun’s research was performed at Massachusetts General Hospital and Harvard Medical School, where he’s a professor of genetics.
Map Shows Where Most Nobel Prize Winners Come From – Newsweek
TSMC, Amkor To Bring Advanced Chip Packaging To U.S. For First Time
TSMC is expanding the capabilities of its chip plant in Arizona by partnering with the US-based Amkor Technology to add advanced packaging and test capabilities. The move will result in more US-based Apple chip production in the future. TSMC's Arizona plant is just getting started with its operations after four years of construction, with the production of A16 chips at the facility in September. However, while manufacturing the chips is one thing, it still needs to be packaged.
Chip packaging is one of the last steps in producing a usable chip that can be used in Apple's hardware. While TSMC makes the chip itself, chip packaging refers to the protective elements around the chip, which are also used to interface with a board. Last Thursday, Amkor and TSMC said they had signed a memorandum of understanding to "collaborate and bring advanced packaging and test capabilities to Arizona." Under the agreement, Amkor will be contracted to provide turnkey advanced packaging and test services to the Arizona TSMC plant.
Raytheon to Make Super Semiconductors for DARPA
Raytheon, an RTX subsidiary, last week announced a three-year, two-phase contract from DARPA to develop foundational ultra-wide bandgap semiconductors (UWBGS) based on diamond and aluminum nitride technology. These semiconductors could revolutionize semiconductor electronics, increasing power delivery and thermal management in sensors and other applications. During phase one of the contract, the Raytheon Advanced Technology team will develop diamond and aluminum nitride semiconductor films and integrate them into electronic devices. Phase two will optimize and mature the diamond and aluminum nitride technology onto larger-diameter wafers for sensor applications.
The unique material properties of UWBGS offer several advantages over traditional semiconductor technologies, enabling highly compact, ultra-high power radio frequency switches, limiters, and power amplifiers. Their high thermal conductivity also allows the ability to operate at higher temperatures and in more extreme environments. The team's goal is to spearhead the development of these materials towards devices that are well suited for both existing and future radar and communication systems with extended capability and range, including cooperative sensing, electronic warfare, directed energy, and circuitry in high-speed weapon systems such as hypersonics.
Read more at Manufacturing.net
Warehouse Construction Is Tumbling as Vacancy Rates Rise
Construction activity and hiring in the business at the heart of logistics operations both are pulling back sharply, the WSJ Logistics Report’s Liz Young writes, as the industrial real-estate market gets further away from the frenzied expansion of the pandemic era. Cushman & Wakefield says industrial space under construction was down 43% from the previous year in the third quarter, the steepest decline since 2008.
The real-estate services firm says the average vacancy rate in the U.S. climbed to 6.4%, the highest level since the end of 2014. The numbers are a stark sign of how shifting consumer demand is cascading across logistics business, slowing the demand for goods transport and storage. Federal hiring figures show warehouse operators shed a seasonally-adjusted 11,000 jobs in September. The storage and distribution sector has shed 171,600 jobs since May 2022.
Japan's Nissan To Invest In Auto Tech Firm Chargescape
Japan's Nissan Motor said on Monday it would invest an undisclosed amount in ChargeScape and roll out the battery charging technology company's services to its electric-vehicle drivers across the United States and Canada. After the transaction, Nissan will pick up a 25% stake in ChargeScape, becoming an equal investor in the joint venture that is currently equally owned by BMW, Ford and Honda.
ChargeScape, which provides software and technology to optimize EV battery charging, competes in a tight market that is dominated by Tesla (TSLA.O), opens new tab and has seen newer entrants such as ChargePoint, Gridserve and BP Pulse. Demand for automotive software catering to electrified vehicles has been on the rise as more companies realign their model lineups with advanced driver aids and automated features.
Stellantis Responds to UAW’s Allegations
Stellantis reportedly has filed suit against the United Auto Workers of America and a local UAW chapter, aiming to “prevent and/or remedy a breach of contract” according to a copy of the complaint filed by the automaker in U.S. District Court in California. The automaker contends that the union is seeking to undo the labor agreement that the two sides reached in October 2023 through allegations that the company has violated last year’s contract, claims that led to the UAW filing an unfair labor practices complaint with the National Labor Relations Board in September.
The UAW’s side of the argument is that Stellantis has not fulfilled its contractual obligation to invest in an electric-vehicle battery and assembly operation at the idled Jeep plant in Belvidere, Ill. It also contends that Stellantis, in violation of the contract, intends to move Dodge Durango assembly from the Detroit Assembly Complex to the Windsor (Ont.) Assembly Plant for the 2026 model year.
Read more at American Machinist
Subs Or Jets: US DOD Warns Congress Budget For 2 Boats May Delay Navy Next-Gen Fighter
The US Navy is both a navy and an air force (it operates the most powerful navy in the world and arguably the second most powerful air force). Both its ships and its aircraft cost vast amounts of money and the US Navy does not have all the money it would like. Defense Secretary Lloyd Austin has warned in a letter addressed to the leader of the armed services committees that if the Navy chooses to fund a second Virginia-class submarine, it will delay the development of the Navy's F/A-XX sixth generation fighter jet. Just days ago, the Navy stated that the sixth generation F/A-XX fighter jet remains a priority.
The Virginia-class is the Navy's newest class of nuclear-powered cruise missile fast attack submarine replacing the older Los Angeles class submarine. The Navy plans to eventually procure 66 of the boats, and it would like to procure them at a rate of two per year. However, the funds for two per year are not forthcoming, and the Navy may have to procure only one this year. Now, the Defense Secretary said that the Navy may be forced to choose between procuring the second boat and delaying the F/A-XX or processing ahead with the F/A-XX and only having funding for one boat in FY 2025.