Member Briefing September 20, 2023
House Stopgap Bill Falters. Leaders Pull Initial Vote
House Republican leaders pulled a planned procedural vote Tuesday on a short-term spending bill, marking another setback to GOP efforts to keep the government funded in the face of angry disagreements among the party’s rank-and-file. The move came after House Speaker Kevin McCarthy (R., Calif.) hosted a morning meeting with House Republicans and said he was open to further talks with dissidents and could make changes to the proposal. He characterized the meeting as productive, but there was little sign of a new path forward.
The short-term proposal outlined Sunday by leaders of the hard-right Freedom Caucus and more-centrist Main Street Caucus would fund the government past Sept. 30 and contains sharp nonmilitary spending cuts and a border-security provision. But about a dozen hard-line members, some from the Freedom Caucus itself, immediately called the deal a nonstarter, raising questions of whether the House would move ahead with the vote.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Ukraine Says it Breached Russian Lines by Recapturing Two Eastern Villages - Reuters
- Azerbaijan Launches Assaults in Disputed Region on Russia’s Doorstep - NPR
- China Sends Top Diplomat to Russia After Surprise U.S. Talks - WSJ
- Biden Warns Against Appeasing Russia as Zelensky Takes UN Stage - Yahoo
- Heading for UN, Ukraine’s President Questions Why Russia Still has a Place There - AP
- Evidence Suggests Ukrainian Missile Caused Market Tragedy - Yahoo
- Artillery Duels Are ‘A Thing Of The Past’ As Ukrainian And Russian Gunners Hunt Each Other At Long Range - Forbes
- Abrams Tanks Expected to Arrive in Ukraine Soon, Austin Says - NYT
- A Ukrainian Cruise Missile With A Special Warhead Blew Up That Russian Submarine From The Inside - Forbes
- 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
Talks Resume in Detroit as UAW Threatens to Widen Strike
The United Auto Workers union threatened Monday to widen strikes against Detroit’s carmakers, while Wall Street analysts tallied potential hits to the companies’ bottom line from wage increases that now seem certain. Tensions remained high four days after UAW workers went on strike at three U.S. factories. The union and Jeep-maker Stellantis STLA - have been trading barbs over a company proposal to possibly close 18 U.S. facilities as part of a potential labor agreement.
During an interview Monday morning with National Public Radio, Fain reiterated that the union is willing to call additional strikes with little notice the longer negotiations drag on. If the companies don’t “respect the demands of our workers, then we will escalate action,” Fain said. UAW leaders are worried about layoffs and plant closures as automakers gradually shift their lineups to electric vehicles. The union is fighting to organize EV-assembly plants and battery factories popping up across the country.
US Housing Starts Drop to Lowest Since 2020 While Permits Rise
U.S. homebuilding plunged to more than a three year-low in August as a resurgence in mortgage rates weighed on demand for housing, but a surge in permits suggested new construction remained supported by a dearth of homes on the market. The decline in housing starts reported by the Commerce Department on Tuesday was the largest in a year and occurred across the board, suggesting that an anticipated housing market recovery was still far off. The report followed on the heels of news on Monday that homebuilders' confidence slumped to a five-month low in September, with more builders reporting they were cutting prices and offering other incentives to lure buyers.
Housing starts tumbled 11.3% to a seasonally adjusted annual rate of 1.283 million units last month, the lowest level since June 2020. Data for July was revised lower to show starts accelerating to a rate of 1.447 million units instead of the previously reported 1.452 million units. Single-family housing starts, which account for the bulk of homebuilding, dropped 4.3% to a rate of 941,000 units last month. Single-family homebuilding dropped in the Northeast, West and Midwest, but rose in the densely populated South.
COVID Update – New Variant BA.2.86 Spotted in 10 States
People across at least 10 states have now been infected by BA.2.86, a highly mutated variant of the virus that causes COVID-19 that authorities have been closely tracking. According to data tallied from the global virus database GISAID, labs have reported finding BA.2.86 in samples from Colorado, Maryland, Michigan, New York, Ohio, Oregon, Pennsylvania, Texas, Virginia and Washington. Estimates suggest BA.2.86 still remains a small fraction of new COVID-19 cases nationwide.
While it remains too early to say how transmissible the variant could be compared to other strains on the rise, officials say BA.2.86 has so far proved it has the ability to drive outbreaks. For now, officials have expressed "guarded hope" about signs the current late summer wave of COVID-19 driven by other variants has passed its peak. One leading indicator of the virus — emergency department visits — has been trending down in recent weeks.
Fed Rate Decision Later Today - What to Expect
The Federal Reserve is expected to hold its benchmark lending rate steady this week as it waits for more data to understand how previous rate hikes are affecting the US economy. The central bank raised rates to a 22-year high in July. The Fed wants to defeat inflation without inflicting unnecessary economic damage that would also jack up unemployment. But while rising interest rates began to affect the housing market almost immediately, officials are still trying to gauge the impact on economic growth, spending and the job market. Research shows that it can take at least a year for those effects to fully kick in, and it’s already been about a year and half since the Fed began to lift rates.
At the conclusion of its two-day policy meeting today, the Fed is also set to release a fresh set of economic projections that will likely reflect stronger economic growth and slightly lower unemployment this year, compared with previous estimates. Officials’ new economic projections will likely show at least one more rate hike this year. There seems to be a consensus among Fed officials that holding rates steady this month is the right move — but some have said the Fed could raise rates again after September.
Climate Week 2023 - No New Fortune 500 Net Zero Commitments
It’s Climate Week in New York, which means the city has become a parking lot for gas-fueled limos ferrying executives and diplomats to an endless series of breakfasts, lunches, and dinners featuring earnest conversations about how to fix the climate. After an explosion of commitments to net zero in 2020 and 2021, business momentum stalled. According a report from Climate Impact Partners, there were no new commitments made in the last year, stalling the percentage of Fortune Global 500 companies that have made significant climate commitments at 66%.
“The backlash (against ESG) is having an effect…The uncertainty—whether due to lack of clarity around SEC reporting, around the expense, around how you link these actions to the company’s bottom line—is causing everybody to pause,” according to Sheri Hickok, CEO of Climate Impact Partners. However the report also shows 76% of the Fortune Global 500 now report on annual emissions, with 55% of them even reporting on the vexing Scope 3 emissions (emissions from suppliers and customers).
Oil Prices Shoot To New 2023 High—And Banks Say There’s More Room To Grow
International benchmark Brent crude and U.S. benchmark West Texas Intermediate futures each hit their highest levels since November trading at $94 and $91 per barrel, respectively. The oil benchmarks are up more than 10% apiece over the last month. JPMorgan strategists led by Marko Kolanovic explained they’re bullish on energy because investors have yet to properly allocate resources toward the asset class despite the surge in commodity prices.
It “sure looks like” oil will surpass $100 per barrel, Chevron CEO Mike Wirth predicted Monday in an interview with Bloomberg. That would be the most expensive price for oil since August 2022. Consumers globally shelled out 14% more for energy between this June and August compared to last summer, as tracked by JPMorgan.
U.S. Business Optimism About China Outlook Falls to Record Low
Political tensions and a slowing economy are sapping the confidence of U.S. businesses operating in China, with the number of companies optimistic about their five-year outlook falling to a record low, a survey published on Tuesday showed. Even after the ending of COVID curbs, which weighed heavily on revenues and sentiment in 2022, the percentage of surveyed U.S. firms optimistic about the five-year China business outlook fell to 52%, according to the annual survey published by the American Chamber of Commerce (AmCham) in Shanghai.
Tensions between major world powers remained a concern for many companies, with U.S.-China tensions cited as a top business challenge by 60% of the survey's 325 respondents, equal to the number who pointed to China's economic slowdown as a significant challenge. Unease about the transparency of China's regulatory environment also rose, with one third reporting that policies and regulations towards foreign companies had worsened in the past year, although many respondents pointed to U.S. government policy rather than China's when asked about pressure to decouple.
Global Debt Hits Record $307 Trillion, Debt Ratios Climb -IIF
Global debt hit a record $307 trillion in the second quarter of the year despite rising interest rates curbing bank credit, with markets such as the United States and Japan driving the rise, the Institute of International Finance (IIF) said on Tuesday. The financial services trade group said in a report that global debt in dollar terms had risen by $10 trillion in the first half of 2023 and by $100 trillion over the past decade.
It said the latest increase has lifted the global debt-to-GDP ratio for a second straight quarter to 336%. Prior to 2023, the debt ratio had been declining for seven quarters. More than 80% of the latest debt build up had come from the developed world with the U.S., Japan, Britain and France registering the largest increases. Among emerging markets, the biggest rises came from the largest economies, namely China, India, and Brazil.
Western Nations are Forging Unusual Alliances to Replace Natural Gas From Russia
Once-obscure corners of the energy world, from offshore Congo to Azerbaijan, are booming as Europe finds new sources of natural gas to replace the Russian supplies that once powered the continent. The shift is redrawing the world’s energy map at a rapid clip. In Bir Rebaa, deep in the Sahara, the Italian energy company Eni and Algeria’s state-owned energy company are drilling dozens of wells, producing gas from previously untapped fields in a matter of months.
All the activity is redirecting the flow of natural gas around the world. Gas once flowed primarily southwest from Russia toward the Mediterranean. Now Europe is preparing to boost imports from Africa, with gas flowing up through Italy to Austria and other countries. Global exports of LNG surged to a record high, fueled by a sharp increase in U.S. shipments to Europe. Before it invaded Ukraine, Russia supplied 45% of the European Union’s gas imports. Now it accounts for just 13%. Still, Moscow could stress Europe’s energy supplies by cutting those shipments, as it did in the months before and after its invasion in February 2022.
China Sanctions Northrop Grumman, Lockheed Martin for Arms Sales to Taiwan
China will impose sanctions against U.S. aerospace and defense firms Northrop Grumman (NOC.N) and Lockheed Martin (LMT.N) for providing weapons to Taiwan, the Chinese foreign ministry said on Friday. The sanctions are being enacted under China's Anti-Foreign Sanctions Law, ministry spokesperson Mao Ning told a regular press briefing. "We urge the U.S. side to effectively abide by the one-China principle... cease U.S.-Taiwan military liaison and stop arming Taiwan, or else it will be subject to a resolute and forceful retaliation by the Chinese side," she said.
U.S. President Joe Biden last month approved the transfer of up to $80 million in funds to Taiwan under the Foreign Military Financing programme, according to a notification sent to Congress. The sanctions were imposed during a week of busy military activity around the democratically-governed island, in which a Chinese naval formation led by the aircraft carrier Shandong passed within 60 nautical miles (111 km) of Taiwan's southeast.
Toyota Keeps Up the Push to Prove It Can Embrace New Technology
The world’s largest carmaker invited a clutch of journalists on a tour of three factories in Aichi prefecture, near its headquarters in the city of Toyota, last week for another peek at the technology it’s developing to expand production of battery-based electric vehicles, as well as a crash course on its famed production system. Reporters heard from engineers at the Teiho plant, who gave a briefing on the progress they’ve made in developing bipolar, liquid iron phosphate (LFP) batteries that Toyota aims to roll out in 2026 or 2027 alongside a full line-up of battery EVs.
"The strength of Toyota's manufacturing lies in our ability to respond to changing times," Chief Product Officer Kazuaki Shingo told reporters on the tour. He pointed to engineering and technology expertise anchored in "TPS", shorthand for the Toyota Production System. Toyota revolutionized modern manufacturing with its system of lean production, just-in-time delivery and "kanban" workflow organization. Its methods have since been adopted everywhere from hospitals to software firms and studied widely in business schools and boardrooms around the world.
World’s First Mass-Produced Humanoid Robot Aims to Assist China’s Aging Population
In response to the increasing demand for medical services amid labor shortages and a rapidly aging population, Shanghai-based Fourier Intelligence is developing an innovative humanoid robot. The GR-1, as it is called, promises to transform healthcare facilities and offer vital assistance to the elderly. the GR-1 is poised to be the world's first mass-produced humanoid robot. This 1.64-meter-tall, 55-kilogram robot possesses an array of human-like capabilities, including walking, obstacle avoidance, and the ability to perform routine physical tasks such as lifting objects. With an emphasis on versatility, the GR-1 can also assist in transferring patients from beds to wheelchairs—an essential function in healthcare facilities.
Fourier Intelligence has an extensive history of manufacturing rehabilitation technology and exoskeletons, which serves as a strong foundation for the development of the GR-1. By combining rehabilitation knowledge with humanoid robotics, Fourier Intelligence aims to create a comprehensive solution that benefits patients across various healthcare needs.