Member Briefing September 19, 2023

Posted By: Harold King Daily Briefing,

Republican Groups Craft Short-Term Bill to Keep Government Open

Two major groups of House Republicans put together a short-term funding proposal to prevent a government shutdown, moving to break the deadlock in their party ahead of down-to-the-wire negotiation with Democrats to keep the government funded past Sept. 30. The proposal would extend government funding until Oct. 31 but cut discretionary spending levels by about 8% for most government programs, including agriculture, labor, environment and homeland security. The cuts wouldn’t apply to the defense budget or the Department of Veterans Affairs.

The proposal unveiled Sunday by leaders of the hard-right Freedom Caucus and more-centrist Main Street Caucus contains sharp spending cuts and a border-security provision that will make the legislation a nonstarter in the Democratic-controlled Senate. The stopgap bill to avoid a shutdown, which was unveiled Sunday night, got an icy reception from the right flank of the slim House GOP majority. Enough members have said that they are against the continuing resolution (CR) plan to block it on the House floor, even though leaders hope to bring it up this week.

Read more at The Hill

War in Ukraine Headlines

UAW Resumes Bargaining Talks With Chrysler-Parent Stellantis

The United Auto Workers and Chrysler-parent Stellantis resumed bargaining talks on Monday as a strike against the Detroit Three automakers entered its fourth day.Union negotiators and representatives of General Motors, and Stellantis held talks over the weekend in an attempt to end one of the most ambitious U.S. industrial labor actions in decades. About 12,700 UAW workers are on strike as part of a labor action targeting three U.S. assembly plants - one at each of the Detroit Three - after the prior four-year labor agreements expired.

The strikes have halted production at plants in Michigan, Ohio and Missouri that produce the Ford Bronco, Jeep Wrangler and Chevrolet Colorado, alongside other popular models. Analysts expect plants that build more profitable pickup trucks like Ford's F-150, GM's Chevy Silverado and Stellantis's Ram to be the next strike targets if the walkout continues. Ford on Friday indefinitely laid off 600 workers that are not on strike at the Michigan Bronco plant because of the impact of the work stoppage. GM says it expects to halt operations at its Kansas car plant this week because of the strike at its nearby Missouri plant, affecting 2,000 workers.

Read more at Reuters

Wall Street Journal Infographic Shows 30 Years of Strikes

Last month, large stoppages from strikes resulted in 4.1 million missed days of work, according to the Labor Department. That preliminary estimate was the biggest monthly total since August 2000. The recent surge has been fueled in part by Hollywood actors who in July joined writers on strike. The Screen Actors Guild-American Federation of Television and Radio Artists has roughly 160,000 members. The Writers Guild of America has about 11,500.

Labor activism has been on the rise in other sectors. Some standoffs have led to stoppages, while others have been resolved with unions negotiating higher pay and better benefits from employers that have struggled to fill openings in a tight labor market. Over the past 30 years, the United Auto Workers has been involved in more than 60 work stoppages including 1,000 workers or more. The union represents employees in industries other than auto manufacturing.

Read more at The WSJ

COVID Update – Sore Throat, Then Congestion: Common Covid Symptoms Follow a Pattern Now, Doctors Say

Doctors say they're finding it increasingly difficult to distinguish Covid from allergies or the common cold, even as hospitalizations tick up. The illness' past hallmarks, such as a dry cough or the loss of sense of taste or smell, have become less common. Instead, doctors are observing milder disease, mostly concentrated in the upper respiratory tract. "It isn’t the same typical symptoms that we were seeing before. It’s a lot of congestion, sometimes sneezing, usually a mild sore throat," said Dr. Erick Eiting, vice chair of operations for emergency medicine at Mount Sinai Downtown in New York City. The sore throat usually arrives first, he said, then congestion.

The Zoe COVID Symptom Study, which collects data on self-reported symptoms in the U.K. through smartphone apps, has documented the same trend. Its findings suggest that a sore throat became more common after the omicron variant grew dominant in late 2021. Loss of smell, by contrast, became less widespread, and the rate of hospital admissions declined compared to summer and fall 2021.

Read more at NBC

Homebuilder Sentiment Turns Negative As More Buyers Defer Purchases Amid High Rates

US homebuilders are feeling less confident about the housing market as the average mortgage rate continues to linger above 7% and box out prospective buyers. That's according to the National Association of Home Builders sentiment index, which for the month of September dipped into negative territory for the first time since April. The index dropped five points to 45, following a six-point drop in August. Any reading below 50 represents a negative outlook for the housing market.

The NAHB sentiment index peaked at 90 in November 2020, when home prices were surging. But then it trended lower with its decline accelerating throughout 2022 as the Federal Reserve began to aggressively hike interest rates, which sent mortgage rates higher. Those borrowing costs are holding down the housing market because home affordability has declined significantly, boxing out a lot of would-be buyers. "High mortgage rates are clearly taking a toll on builder confidence and consumer demand, as a growing number of buyers are electing to defer a home purchase until long-term rates move lower," NAHB chief economist Robert Dietz said.

Read more at Insider

Fed Interest Rate Watch

With the Federal Open Market Committee widely expected to keep rates unchanged at its meeting on Wednesday, investors and economists will keep their eyes trained on the policymakers' economic projections that are released at the same time. In addition, they'll be listening for any hints about the likely path at following Fed meetings, especially the last one of the year on Dec. 12-13. Nearly all Fed officials have been repeating Fed Chair Jerome Powell's mantra of "higher for longer," but the summary of economic projections ("SEP") will offer a view of how high the central bank may go and for how long.

Overall, the economy has remained pretty resilient. A hard landing seems to be out of the cards for now, but that can be difficult to predict over the long term, especially if the Fed is late to react to economic conditions (remember the infamous "transitory" call from 2022?). Uncertainty always looms over the Fed's economic outlook, but Powell may emphasize that fact even more during his post-decision press conference given the recent auto workers' strike and a potential government shutdown. The latter possibility may worry the data-dependent central bank even more, as government agencies would stop issuing economic reports during a shutdown.

Read more at Seeking Alpha

Consumer Sentiment Inches Down, but Inflation Expectations Improve

Consumer sentiment fell again in the first few weeks of September, as energy prices increased and a potential government shutdown loomed closer. The University of Michigan’s consumer sentiment index dipped 1.8 points to 67.7, according to preliminary data from the university’s consumer survey. Economists polled by FactSet were projecting for it to fall to 69 from August’s 69.5 reading.

Inflation expectations, however, improved modestly this month. For the year ahead, consumers are expecting inflation to be 3.1%, down from 3.5% in August and marking the lowest reading since March 2021. Five-year expectations were 2.7%, down from 3% last month. Sentiment has been gradually improving since plummeting to record lows in June 2022. September’s preliminary reading marks a 15.5% year-over-year increase from the same period last year, and is about 35% above the record low – but it’s still shy of the historical average reading of 86, Hsu added.

Read more at Barron’s

Cost of Imported Goods Registers Biggest Increase in 15 Months  

The cost of imported goods rose 0.5% in August, marking the biggest increase in 15 months, largely because of higher oil prices. Economists polled by the Wall Street Journal had estimated a 0.3% increase. If fuel is set aside, import prices fell 0.1% last month, the government said. What's more, the cost of imports has fallen 3% in the past year. Prices have eased since a huge runup in 2021 and 2022. Still, the recent increase in prices shows that inflation is unlikely to return to pre-pandemic levels of 2% or less anytime soon. Other snapshots of U.S. inflation such as consumer and wholesale prices also rose sharply in August.

The cost of foreign-produced fuel rose 6.7% last month after a 2.2% increase in July. The cost of most other imports was little changed. Prices fell for industrial supplies and autos, offsetting increases in food and consumer goods. Nonfuel import prices have declined 0.8% in the past 12 months. Export prices rose 1.3% in August. They are down 5.5% over the past year, however.

 Read more at Morningstar

Retail Sales Remain Strong

Retail sales rose 0.6% in August, building on the 0.5% gain in July. It was the fifth straight month with retail spending growth. Excluding motor vehicles and gasoline, retail sales increased 0.2% for the month. The August data saw mixed but mostly higher results. On the positive side, consumer spending growth was led by strength among gasoline stations (up 5.2%), clothing and accessories stores (up 0.9%) and health and personal care stores (up 0.5%), among others. In contrast, retail sales declined at sporting goods and hobby stores (down 1.6%), miscellaneous store retailers (down 1.3%) and furniture and home furnishings stores (down 1.0%), with flat growth for nonstore retailers.

Retailers with the largest increases in spending over the past 12 months included food services and drinking places (up 8.5%), health and personal care stores (up 7.8%), nonstore retailers (up 7.2%) and motor vehicle and parts dealers (up 4.4%). At the same time, sizable year-over-year declines in retail sales occurred for gasoline stations (down 10.3%), furniture and home furnishings stores (down 7.8%), building material and garden supply stores (down 4.9%) and department stores (down 3.4%), among others.   

Read more at CNBC

Clorox Says Cyberattack Is Hurting Product Availability, Will Weigh on Quarter

Clorox said a cyberattack that was disclosed last month is disrupting operations and hurting the availability of the bleach and cleaning-wipe maker’s products.The company said that the fallout from the attack will hurt its current-quarter financial results but that it is still too early to evaluate the impact. “It is premature for the company to determine longer-term impact, including fiscal year outlook,” Clorox said Monday in a securities filing.

The company disclosed unauthorized activity on some of its information-technology systems on Aug. 14. Clorox took certain systems offline and began manually ordering and processing products at a reduced rate of operations. Clorox said it is still operating at a lower rate of order processing and has recently started to see an increase in product-availability issues. The company said that it believes the cyberattack is now contained but that it caused wide-scale disruption of operations after damaging some of its IT infrastructure.

Read more at The WSJ

Production of Key Munition Years Ahead of Schedule, Pentagon Says

Production of 155mm artillery rounds crucial to the war in Ukraine is years ahead of schedule, according to Pentagon acquisition chief Bill LaPlante. The Pentagon’s original goal was to build 85,000 of the rounds per month by fiscal 2028. It’s currently on pace to reach 100,000 per month by FY25, LaPlante said, and at least 57,000 a month by spring 2024.The current rate, he noted, is 28,000 per month — about double the rate from half a year ago.

This pace is welcome news for a Defense Department intent on bulking up its industrial base. The 155mm rounds have been a case study of sorts for surging production to meet an evolving wartime need, in this case Ukraine’s defense against a Russian invasion. Last year’s Pentagon funding bill included almost $1.5 billion to increase the Army’s production capacity for the 155mm shell. Another $18 billion will be spent over the next 15 years to grow the service’s organic industrial base.

Read more at Defense News

Enrollment up at SUNY Orange

SUNY Orange’s Fall 2023 semester commenced with an impressive 11.5 percent surge in first-day credit enrollment compared to the prior year. The year-over-year enrollment spike of 11.53 percent in total credit hours (FTE) marked the highest in over 30 years, surpassing the previous 9.74 percent record in 2001. About 55 percent of this semester’s students are full-time. The headcount at the start of the semester rose by 7.51percent, with 276 more students across Middletown and Newburgh campuses.

Dr. Kristine Young, SUNY Orange President, expressed pride in collaborative efforts that contributed to enrollment growth. Despite national community college declines and pandemic challenges, the college emphasized student retention. Continuing students increased by 7.8 percent, affirming enhanced retention strategies. New first-time students surged by 12.8 percent year over year. The college, a certified Hispanic Serving Institution (HSI), experienced a 15.49 percent rise in Hispanic and Latino students, and a 13.75percent increase in Black students, both groups disproportionately affected by the pandemic.

Read more at The Warwick Advisor

Soybean Supremacy - Corteva Takes on Bayer

For years, one company dominated the roughly 80 million acres of soybeans planted in the U.S. after Missouri-based Monsanto revolutionized farming with seeds genetically engineered to tolerate the weedkiller Roundup. Bayer, the German agriculture and pharmaceutical company, became the top crop-seed maker after its 2018 acquisition of Monsanto. A rival agriculture company, Corteva has been flexing its muscles since it was spun out of DowDuPont in 2019. It has pulled ahead with new biotech soybeans that the company says now make up more than half the market.

Together, Bayer and Corteva sell roughly 70% of all corn and soybean seeds planted in the U.S., up from about 40% two decades ago, according to the U.S. Department of Agriculture. In the U.S. market for soybeans—the nation’s second-largest crop by acreage behind corn—the companies’ acts of rivalry have ranged from pitching individual growers at summertime farm shows to fighting over patents in court.

Read more at The WSJ