Member Briefing October 29, 2024
Economists Warn of New Inflation Hazards After Election
A punishing 2½-year fight to bring inflation down appears to be succeeding. The election could change that. Inflation has fallen thanks to higher interest rates and big assists from healed supply chains and an influx of workers. But whether borrowing costs and price growth continue to ease next year could turn heavily on policy choices by Donald Trump or Kamala Harris. Both candidates support policies to boost growth that might keep inflation from falling any farther. But economists and even conservative-leaning advisers worry that the ideas backed by Trump, in particular, risk stoking the embers of inflation. Those include his proposals to slap across-the-board tariffs on imported goods, to deport workers, and to lean on the Federal Reserve to lower interest rates.
“Put them all together, these levers are moving more in an inflationary direction. I’m legitimately worried about inflation worsening in 2025,” said Brian Riedl, a former Republican Senate aide now at the conservative Manhattan Institute.
Global Steel Output Drops for Fourth Straight Month
Global steel production fell for the fourth consecutive month in September, down 1.2 million tons or -0.8% from August to 143. 6 million metric tons across 71 countries worldwide. The new total reported by the World Steel Association brings global year-to-date raw steel production to 1.39 billion metric tons, or -4.7% less than the September 2023 total, and -1.9% less than the January-September 2023 total.
The steady decline in 2024 output is an apparent a response to persistent global inflation and its effects on manufacturing and construction activity. In World Steel’s recent report on short-range demand for global steel consumption, it lowered the forecast from its April report, now predicting that 2024 consumption will decline to 1.75 billion. That will mean this will be the third consecutive year of declining global steel consumption.
Global Headlines
Middle East
- Israel And Hamas: The Latest News – The Guardian
- Egypt's President Says It Has Proposed A 2-Day Gaza Cease-Fire And Release Of 4 Hostages – France 24
- Israeli Strikes on Iran Expose Gap in Prowess Between Two Arch Foes – WSJ
- What Satellite Images Reveal About Israel's Strikes On Iran - BBC
- Lebanon's Health Care System 'Under Siege' Amid Israel's Military Campaign - Newsweek
- Israeli Army Orders Evacuation In Lebanon's Port City Of Tyre Ahead Of Attack – France 24
- Iranian-German Prisoner Jamshid Sharmahd, Who Lived In US, Executed In Iran Over Terror Conviction – ABC News
- 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
- The First Truckloads Of North Korean Troops May Have Reached The Front Line In Kursk - Forbes
- Israel’s Strike on Iran Also Hit Russian Arms Industry’s Once-Strong Image - WSJ
- G7 Leaders Finalize Deal To Use Russia Assets For $50B Ukraine Loan - Poltico
- Ukraine Says Russia Used 100 Drones In Latest Aerial Attacks - VOA
- Putin Renews Warning to NATO Over Ukraine Missiles - Newsweek
- Ukraine Resorts to Shaking Down Nightlife Spots for Recruits as Troop Numbers Fall - WSJ
- Kursk Videos Show Ukrainian Bradley, Abrams Engage Russian Tanks - 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
- The Middle East Drug Fueling War, Crime and All-Night Parties–WSJ
- Japan's Government In Flux After Election Gives No Party Majority - Reuters
- Duterte Offers 'No Apologies, No Excuses' For Deadly Philippine Drug War - VOA
- Sudan Civil War Pushes Darfur To The Brink – France 24
- Far-Right ‘Venezuela Majority’ Signals New Power Balance In European Parliament - Politico
- Georgian Opposition Pushes Rally To Challenge Election Results - VOA
- Migration From Venezuela Surges After Nicolás Maduro Snatches Election From Opposition – Financial Times
- Planet-Heating Pollutants In Atmosphere Hit Record Levels In 2023 – The Guardian
- Britain’s New Mps Rage At Parliament’s Old Traditions – Politico
Policy and Politics
Smaller Gap, Migrant Spending Battle To Shape N.Y.'S Next Budget
The state’s financial plan is due for an update now halfway through the state’s $237 billion fiscal year. The state Budget Division will release new figures by Wednesday that state Budget Director Blake Washington said will be good news for the state: Next year’s $2.3 billion gap will be smaller than expected. “This part of the year is essentially our bread and butter,” Washington told reporters on Friday in Albany.
Tax receipts are greater than expected, the budget director said — boosted by a strong stock market and higher profits on Wall Street and growing employment numbers. But there will still be a gap to close, and the Budget Division asked state agencies to keep spending flat again next year. “We ask our agencies to do exactly what our families are doing,” Washington said. “Our families aren't spending more on a day-to-day basis unless they absolutely need to.” The updated financial plan will give state officials a better picture about what’s in store for next year’s budget.
Read more at NY State of Politics
At a Pivotal Moment, U.S. Economic Data Will Be a Mess
Hurricanes Helene and Milton are likely to wreak havoc on economic indicators at a particularly delicate time. The employment report for October comes out Friday, four days before the election. It will bear the hurricanes’ marks, which could make it especially susceptible to being spun for political advantage in the final stretch of the presidential campaign. The Federal Reserve’s next decision on rates comes just two days after Election Day. Hurricane effects on the data will make it harder for the Fed to decide how much—or whether—to cut interest rates to keep the economy solid and inflation headed down.
Helene was the deadliest hurricane to hit the U.S. mainland since Katrina, and many affected communities are still recovering. Milton came just two weeks later. The storms temporarily put people out of work and shut stores, factories and construction sites. Eventually, the economy will bounce back, but these effects make it harder to understand how things are faring now. October’s number will be depressed not just by the storms, but the Boeing strike. Economists expect the report will show the economy added 110,000 jobs. In GDP terms, the economy might look a bit better off than if the hurricanes hadn’t happened. People will go back to work, and lost sales will end up merely delayed instead of canceled. Meanwhile, rebuilding efforts will add to GDP and could exceed activity that was permanently lost.
Court Rules Elon Musk Is Not Required To Remove Controversial Tweet About Tesla Union
A 2018 tweet made by Tesla CEO Elon Musk suggesting workers would lose stock options if they formed a union was ruled as protected speech Friday, preventing Musk from having to follow a prior court order commanding him to delete the controversial post. The Fifth Circuit Court of Appeals said in a filing the tweet, which asked Tesla workers “why pay union dues & give up stock options for nothing?” fell under protected speech and did not have to be deleted, overturning an order from the National Labor Relations Board last year to remove the post.
The court said Musk’s tweet does not “fall into the categories of unprotected communication like obscenity and perjury” and that the NLRB is “powerless to delete protected speech.” The court noted it did not reach a conclusion on whether the tweet was a violation of the National Labor Relations Act, which gives employees the power to form or join unions. Friday’s ruling stems from when three pro-union Tesla workers and the United Auto Workers filed charges with the NLRB against Tesla more than three years ago, accusing it of engaging in unfair labor practices.
Health and Wellness
Tracking The U.S. Bird Flu Outbreak Has Been Hard. It’s About To Get Harder
If one can point to anything good about the H5N1 bird flu outbreak in dairy cattle it’s the timing. Transmission of the virus through U.S. dairy herds took off when last winter’s flu season was effectively over, making the job of looking for people infected with H5N1 an easier task in theory, though there have been plenty of human hurdles impeding those efforts. But in the months since the outbreak was first detected, the spread of the virus in cows has not been contained, with infections reported in 380 herds in 14 states so far. Now, with cold and flu season looming, it is likely to become significantly more difficult for the country’s public health departments to track the virus.
In the weeks and months to come, when dairy farmworkers or others culling infected poultry flocks develop influenza-like symptoms, what ails them could be a common cold, Covid-19, regular influenza, or a bird flu virus. Spotting a new flu virus before it starts to transmit more easily among humans and stopping that spread — if it’s possible — could make the difference between a close call and something no one wants, another pandemic. Trying to do this surveillance at any point in the year is devilishly tough. Doing it in flu season will be next-level hard, experts warn.
Election 2024
- Harris v Trump: What to Watch For as White House Race Enters Final Week - Newsweek
- Billionaire Daughter Of LA Times Owner Says Harris Endorsement Pulled Over VP’s Gaza Stance - Forbes
- When Will We Know The Results Of The Presidential Election? – The Hill
- Virginia officials ask Supreme Court to allow voter purge aimed at non-citizens - Politico
- Trump Gains With Hispanic Men, Harris Up With White Women, Reuters/Ipsos Polls Show - Reuters
- Harris, Trump Look To Sway The Last Undecided Voters - VOA
- Harris To Focus On Manufacturing During Trip To Michigan Days Before Election – NY State Of Politics
- Can John Mannion Flip A Key Upstate Swing District? – City & State
- Crush Of Spending In These Blue States Is Political Penance For Dems - Politico
- Why Fears Of Post-Election Violence May Be Inflated – The Hill
- Real Clear Politics General Election Polls
- Real Clear Politics Electoral Map
- Latest Polls - FiveThirtyEight
Industry News
Ford Earnings
compliance issues effectively.
Read more at Material Handling & Logistics
Boeing Workers Want Their Pension Back. Here’s Why The Company Should Consider It.
A significant share of Boeing’s striking assembly workers are digging in their heels on a seemingly quixotic demand: the revival of their pension plans. When members of the machinists union at Boeing narrowly voted in 2014 to accept a contract extension that froze the pension plan and closed it to new hires, from a distance it appeared to be bowing to the inevitable: pensions were going the way of the Dodo in the United States. But 10 years later, benefits experts told Forbes pensions are making a quiet comeback, aided by better economic conditions, regulatory changes and new wrinkles on the plans that reduce the risks for employers in promising workers retirement income for the rest of their lives.
Now some aerospace industry figures say it could be a smart move for Boeing to play ball with the union’s pension demand to help the company retain talent in a tight labor market. The loss of experienced manufacturing workers since the Covid pandemic has played a key role in a steady drumbeat of quality issues that have dogged Boeing, aerospace experts have told Forbes. It can take years for the members of the machinists union to master complicated assembly tasks that are done largely by hand.
Boeing launches offering to raise roughly $19 billion to shore up finances
Boeing on Monday launched a stock offering that could raise roughly $19 billion as the planemaker looks to strengthen its finances squeezed by a month-long worker strike and a year-long safety crisis. Boeing is offering 90 million in common stock and $5 billion in depositary shares. The company’s shares fell 1% in premarket trading. The combination of labor woes and its production problems have caused it to burn cash the last three quarters. Last week, the company reported a $6 billion third-quarter loss and said it would burn cash next year. The same day, striking workers rebuffed an improved contract.
A capital raise is essentially for Boeing to preserve its investment-grade credit rating. Rating agencies have warned that a prolonged strike may lead to a downgrade in Boeing’s credit rating, likely pushing up the cost of capital. S&P Global has warned of a ratings downgrade if Boeing slipped below target cash balance of $10 billion or if the company had to increase leverage to meet debt maturities. Earlier this month, Boeing entered into a $10 billion credit agreement with banks and announced plans to raise up to $25 billion through stock and debt offerings. The strike is costing the company more than $1 billion per month, according to one estimate that was released before Boeing announced it would cut 10% of its workforce.
Rolls-Royce Engines Power Updated B-52J ‘Stratofortress’
The U.S. Air Force plans to keep the B-52 Stratofortress bomber operational into the mid-21st century, potentially surpassing a century of service. The upcoming B-52J variant marks the most significant upgrade in the aircraft's history. Key enhancements include replacing the old Pratt & Whitney TF33 engines with new Rolls-Royce F130 engines under the Commercial Engine Replacement Program, boosting fuel efficiency by 30%. The B-52J will also feature improved avionics, digital displays, and is set to carry the Hypersonic Attack Cruise Missile (HACM), a scramjet-powered weapon capable of speeds over Mach 5.
More than 70 years ago, the legendary B-52 strategic bomber first took to the skies for the U.S. Air Force. This long-range, subsonic aircraft may be rapidly aging, but the Air Force is nowhere near pushing it out of service. In fact, the Stratofortress will continue serving into the mid-21stt century. It might pass the century mark before it is finally retired.
Read more at The National Interest
Volkswagen Targets Layoffs And 10% Pay Cuts Amid Plans For German Plant Closures, Union Says
Volkswagen is considering widespread pay cuts and layoffs as well as the closure or size reduction of its plants in Germany, the company’s works council said Monday. Volkswagen management recently presented plans to the council that include a 10% reduction in pay across the board, as well as wage freezes in 2025 and 2026, according to Daniela Cavallo, head of the works council. All factored in, the body estimates workers will suffer pay cuts of around 18% over the period. In a CNBC-translated statement out Monday, Volkswagen said that the overhaul is necessary due to economic conditions.
Workers with certain collective wage agreements would also lose bonuses and additional payments on employment anniversaries, said the works council, which is made up of a group of elected staff members who represent the interests of a company’s workforce. Volkswagen also intends to shut three factories and downsize all other plants in Germany, Cavallo said. Volkswagen management presented its plans to the works council separate from ongoing discussions about labor agreements, the council said. The next round of these talks is set to take place on Wednesday of this week, when Volkswagen is also due to release its latest quarterly earnings.
China Industrial Profits Extend Drop as Deflation Takes Toll
Profits at China’s industrial firms in September declined at a faster pace than a month earlier, as deflationary pressures sap the strength of corporate finances. Last month’s industrial profits at large Chinese companies fell 27.1% from a year earlier, after a 17.8% plunge in August, the National Bureau of Statistics said in a statement Sunday. Profits decreased 3.5% in the first nine months from the same period in 2023.
Industrial profits provide a key measure of the financial health of factories, mines and utilities that can affect their investment decisions in the months to come. Weaker profits became emblematic of the challenges facing China’s $18 trillion economy, prompting measures such as interest-rate cuts since late September. Deepening deflation in producer prices was likely a drag on company earnings despite faster growth in industrial output. Factory-gate prices extended declines for a 24th straight month in September, with the recent drop accelerating, reflecting weak domestic demand.
Oil Prices Drop Dramatically After Israel's Limited Strikes on Iran
Oil prices dropped dramatically at the start of the week after Israel’s limited reaction to Iran’s missile attack convinced markets that a marked escalation in the conflict was unlikely. Iran’s Supreme Leader Ayatollah Ali Khamenei then helped to cool tensions on Sunday when he signaled there would not be any direct response to Israel’s strikes in Iran. The price of West Texas Intermediate tumbled from $71.78 on Friday to $68.01 early on Sunday morning before recovering slightly. Brent crude oil futures, meanwhile, fell from $76.05 on Friday to below $72 before bouncing back toward $73.
The geopolitical risk premium in oil markets climbed dramatically on October 1st when Iran fired almost 200 ballistic missiles at Iran in response to Israel killing Hamas’ political leader Ismail Haniyeh in Tehran. After weeks of speculation about how Israel would respond, including reports that it might target oil and gas sites in Iran, the relatively limited scope of the attack on Saturday has helped cool tensions in the region.
Survey: Supply Disruption is Top Risk to Procurement
With all of the various factors that can affect procurement, a recent Gartner survey found that supply chain distuption is the top threat. The unpredictability and velocity of disruptions as well as the magnitude of their impact is why this is the top concern, notes the study. "CPOs’ concerns about supply disruptions reflect the often unpredictable nature and potentially existential impacts of these events," said Andrea Greenwald, senior director Analyst in Gartner’s Supply Chain practice, in a statement. “The necessity of establishing a strategic supplier risk management program has never been more critical, as companies that neglect to develop such a program now will struggle significantly when the next crisis arises,” added Greenwald.
Based on the survey analysis, Gartner recommends that CPOs:
- Assess and prioritize risks: CPOs should evaluate the impact of all major risk factors and prioritize them based on their likelihood, impact, and velocity. This includes considering organizational maturity and industry-specific factors.
- Develop and/or strengthen partnerships: Segment suppliers that provide critical goods and services to the organization and implement techniques to proactively safeguard the organization.
- Navigate internal complexity: Collaborate with strategy, finance, and legal teams to address macroeconomic factors and compliance issues effectively.
Read more at Material Handling & Logistics