Member Briefing Sep[tember 23, 2024
The Conference Board US Leading Economic Index Trends Lower in August
The leading indicators for the U.S. economy sank 0.2% in August, the privately run Conference Board said Thursday. That is the sixth straight monthly decline. The index fell 0.6% in July. The leading index is a composite of 10 forward-looking components designed to show whether the economy is in danger of falling into recession and where the economy is headed in the near term. Economists polled by the Wall Street Journal had forecast a 0.3% drop in the index in August. The August index was not as weak as July’s because building permits and manufacturing hours turned positive. The drivers of the weakness remained the same — weak factory orders and the interest-rate spread between 10-year Treasury yields and the federal-funds rate, said Eugenio Aleman, chief economist at Raymond James.
Recession fears have picked up over the summer as the labor market has stumbled. “The economy will lose momentum in the second half of this year as higher prices, elevated interest rates and mounting debt erode domestic demand,” said Justyna Zabinska-La Monica, senior manager of business-cycle indicators at the Conference Board. The Federal Reserve’s most recent Beige Book, a survey of conditions in the economy from the central bank’s business contacts, showed that two-thirds of Fed districts reported flat or declining activity.
Manufacturers Cheer Large Interest Rate Cut
The U.S. Federal Reserve cut its key lending rate by half a percentage-point Wednesday in its first reduction since the Covid pandemic, sharply lowering borrowing costs just before November's presidential election. The 50-basis-point cut was larger than predicted. Dan Cakora, pricing economist for manufacturing pricing software company Vendavo, says the rate cuts should make it easier for businesses to borrow money for investments in new equipment.
Ryan Martin, senior research director for industrial and manufacturing at ABI Research, says the rate cuts should spur some near-term spending on equipment, and the cuts should accelerate growth across the entire economy, leading to more orders for factories. “If demand for goods goes up, there is a ripple that ultimately goes back to the manufacturing sector,” Martin says. However, the biggest challenges facing manufacturers are people and technology problems, not the cost of money, he adds.
Existing Home Sales Fall Back in August
After improving in July, existing home sales dipped 2.5% in August to a seasonally adjusted annual rate of 3.86 million, nearly returning to the prior cycle low reached in October 2023. Although mortgage rates have retreated meaningfully in recent weeks, rates at the time of contract signings in June and July were still running near 7.0%. It is likely that mortgage rate improvements since then will serve to spark housing demand in the coming months.
However, rates are only one factor holding back sales. Single-family resale prices were up 2.9% year-over-year in August, a slightly lower price hike than in prior months but a solid increase nonetheless. Ongoing price increases pile on top of the hefty price appreciation that has already occurred. At $422,100, the median single-family resale price in August was 50% higher than the $281,900 median value in August 2019. Although inventories have improved over the past year, the overall availability of resale homes remains quite low, helping to keep a floor under price growth.
Global Headlines
Middle East
- Israel And Hamas: The Latest News – The Guardian
- All-Out Israel-Hizbullah War Looms - CNN
- Hezbollah Targets Israel in Overnight Retaliation for Week of Israeli Attacks - NYT
- Hezbollah Targets Base Near Haifa After Israeli Strike In Beirut Killed 37, Including Top Commander - AP
- Israel Killed Senior Hezbollah Commander In Beirut Strike - CNN
- Hezbollah Hunts for Security Gaps, Moles as It Reels From Brutal Week - WSJ
- The Houthis Probed Israeli Defenses With A Ballistic Missile, And Iran Is Likely Taking Notes – Business Insider
- Hack Of Hezbollah Devices Exposes Dark Corners Of Asia Supply Chains - Reuters
- 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
- Russian Strike On Apartment Block In Kharkiv Injures 21 - Reuters
- With $39 Billion Loan for Ukraine, Europe Moves Ahead Without U.S - NYT
- Ukraine’s Gun-Armed Ground Robot Just Cleared A Russian Trench In Kursk - Forbes
- Volunteers dying as Russia’s war dead tops 70,000 - BBC
- UN General Assembly Widely Supports A Palestinian Resolution Demanding Israel End Its Occupation - AP
- Why Putin’s Nuclear Saber-Rattling On Ukraine Sounds Different This Time - CSM
- Volodymyr Zelensky Has a Plan for Ukraine’s Victory – the New Yorker
- Ukrainian Drones Just Blew Up 2,000 Tons Of Ammo in Southern Russia - 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
Other Headlines
- Hungary Refuses To Pay Fines For Breaking EU Asylum Rules. Brussels Is Taking The Money Anyway. - AP
- Haiti Edges Towards Holding First Elections Since 2016 - BBC
- Brazil Drought Punishes Coffee Farms And Threatens To Push Prices Even Higher - AP
- Storm Boris Batters Italy After Wreaking Havoc In Central Europe - BBC
- France Unveils A More Right-Wing Government After Deadlock - Reuters
- 6 Russian Jets Intercepted Over Baltic Sea - Politico
- Sri Lankan Outsider Leftist Dissanayake Wins Presidential Election – Nikkei Asia
- Beer And Merriment Flow At The 189th Oktoberfest In Munich – France 24
- Taiwan Rattled By 5.3 Magnitude Quake, No Immediate Reports Of Damage - Reuters
- China And Japan Reach Deal On Fukushima Nuclear Plant's Water – Nikkei Asia
Policy and Politics
Johnson Rolls Out Plan B To Avert Government Shutdown
House GOP leaders on Sunday unveiled a plan to keep the government funded for three months after Speaker Mike Johnson’s (R-La.) opening gambit to avoid a shutdown failed due to opposition from Republicans. The continuing resolution (CR), which was the result of bipartisan negotiations in the House and Senate, would keep the government funded at current levels through Dec. 20 — setting up a holiday funding fight.
Republican leaders are aiming to bring the bill up under a regular rule process, with a floor vote on the legislation by Wednesday, according to GOP aides. It would then head to the Senate ahead of the Sept. 30 shutdown deadline. The bill also includes more than $231 million for the Secret Service, which has again come under scrutiny in the wake of an apparent second assassination attempt against former President Trump. The Speaker added that the clean, three-month CR is intended “to prevent the Senate from jamming us with a bill loaded with billions in new spending and unrelated provisions,” and that the legislation is “a very narrow, bare-bones CR including only the extensions that are absolutely necessary.”
FTC Sues Drug Middlemen Over Manipulating Insulin Market
The Federal Trade Commission on Friday sued three large U.S. health companies that negotiate insulin prices, arguing the drug middlemen boost their profits while “artificially” inflating costs for patients. The suit targets the three biggest so-called pharmacy benefit managers, UnitedHealth Group’s Optum Rx, CVS Health’s Caremark and Cigna’s Express Scripts. All are owned by or connected to health insurers and collectively administer about 80% of the nation’s prescriptions, according to the FTC.
The agency’s suit argues that the three PBMs have created a “perverse” drug rebate system that prioritizes high rebates from drugmakers, which leads to “artificially inflated insulin list prices.” It also alleges that PBMs favor those high-list-price insulins even when more affordable insulins with lower list prices become available.
State Releases Scoping Report For State Route 17 Project
The state has completed a scoping report for a project to enhance safety and mobility along a 30-mile stretch of State Route 17 in Orange and Sullivan Counties. The mobility and access improvement project involves improvements to the stretch of State Route 17 between exit 113 in Wurtsboro and the Thruway Harriman. It is intended to address operational and safety deficiencies, improve congestion-related travel times and address features of the corridor that currently do not meet interstate standards. Multi-modal improvements will be assessed and considered.
“Opening the Route 17 corridor is the key to unlocking the Hudson Valley’s potential and the creation of good-paying jobs,” said Greg Lalevee, business manager of International Union of Operating Engineers Local 825.
Health and Wellness
Genetic Ghosts Suggest Covid’s Market Origins
A team of scientists say it is “beyond reasonable doubt” the Covid pandemic started with infected animals sold at a market, rather than a laboratory leak. They were analysing hundreds of samples collected from Wuhan, China, in January 2020. The results identify a shortlist of animals – including racoon dogs, civets and bamboo rats – as potential sources of the pandemic. Despite even highlighting one market stall as a hotspot of both animals and coronavirus, the study cannot provide definitive proof.
Their analysis was published last year and the raw data made available to other scientists. Now a team in the US and France says they have performed even more advanced genetic analyses to peer deeper into Covid’s early days. It involved analysing millions of short fragments of genetic code – both DNA and RNA – to establish what animals and viruses were in the market in January 2020. The results, published in the journal Cell, highlight a series of findings that come together to make their case. It shows Covid virus and susceptible animals were detected in the same location, with some individual swabs collecting both animal and coronavirus genetic code. This is not evenly distributed across the market and points to very specific hotspots.
NYS COVID Update
The Governor updated COVID data for the week ending September 20th.
Deaths:
- Weekly: 56
- Total Reported to CDC: 84.047
Hospitalizations:
- Average Daily Patients in Hospital statewide: 1,060
- Patients in ICU Beds: 123
7 Day Average Cases per 100K population
- 9.6 positive cases per 100,00 population, Statewide
- 11.8 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Election 2024
- Five Takeaways From The Latest Flurry Of Harris-Trump Polls – The Hill
- Trump Rallies For 5 NY Republicans Fighting To Get Reelected – City & State
- Trump Cabinet 2.0: Who’s In The Running For Top Spots – The Hill
- Who Could Be In Harris’s Cabinet? Let The Chatter Begin – The Hill
- Secret Service Report Says These Failures Led Up To Trump Assassination Attempt In July - Forbes
- Trump Dangles Tax Relief to Blue-State Voters. His Supporters Cheer. - WSJ
- Study Shows Taylor Swift’s Endorsement May Turn Off Voters Harris Needs – The Hill
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Real Clear Politics Electoral Map
- Latest Polls - FiveThirtyEight
Industry News
Constellation Energy To Restart Three Mile Island Nuclear Plant, Sell The Power To Microsoft For AI
Constellation Energy plans to restart the Three Mile Island nuclear plant and will sell the power to Microsoft, demonstrating the immense energy needs of the tech sector as they build out data centers to support artificial intelligence. Constellation expects the Unit 1 reactor at Three Mile Island near Middletown, Pennsylvania, to come back online in 2028, subject to approval by the Nuclear Regulatory Commission, the company announced Friday. Constellation also plans to apply to extend the plant’s operations to at least 2054. Electricity demand from data centers is expected to surge in the coming decades as the tech sector ramps up AI, threatening to strain the electric grid. While estimates vary, Goldman Sachs has forecast data centers will consume 8% of total U.S. electricity demand by 2030, compared with 3% currently.
Microsoft will purchase electricity from the plant in a 20-year agreement to match the energy its data centers consume with carbon-free power. Constellation described the agreement with Microsoft as the largest power purchase agreement that the nuclear plant operator has ever signed. Unit 1 ceased operations in 2019 as nuclear power struggled to compete economically with cheap natural gas and renewables. It is separate from the reactor that partially melted down in 1979 in the worst nuclear accident in U.S. history.
US Decision On Nippon Bid For US Steel Pushed Back To After Nov Election, Sources Say
The U.S. national security panel reviewing Nippon Steel's $14.9 billion bid for U.S. Steel let the companies refile their application for approval of the deal, a person familiar with the matter said, delaying a decision on the politically sensitive merger until after the Nov. 5 presidential election. The move offers a ray of hope for the companies, whose proposed tie-up appeared set to be blocked when the Committee on Foreign Investment in the United States (CFIUS) alleged on Aug. 31 the transaction posed a risk to national security by threatening the steel supply chain for critical U.S. industries.
The deal has become a political hot potato. This month, Vice President Kamala Harris, the Democratic presidential nominee, said at a rally in Pennsylvania, the swing state where U.S. Steel is headquartered, that she wanted U.S. Steel to remain "American owned and operated," echoing a view held by President Joe Biden. Postponing the decision to after the U.S. elections will "dial down" the political temperature but does not guarantee approval, said David Boling, a former U.S. trade official who is now an analyst at Eurasia Group.
Boeing Girds For Long Strike As Gig Economy Gives Workers Clout
Around Boeing Co.’s vast aircraft manufacturing hub in Seattle, the great belt tightening has begun as the planemaker and its factory workers settle in for a labor dispute that will test the resolve of both sides. Striking employees received their final Boeing paycheck on Thursday, and the company stops paying for their health insurance on Sept. 30. Both measures will pinch household finances, typically ratcheting up the pressure and stakes for union negotiators in contract talks to reach an agreement.
But as workers stare down the embattled manufacturer for better pay and benefits, the 33,000 members of IAM District 751 have the full benefit of a tight labor market and gig economy that provides a quick transition into jobs that require few skills and help make ends meet. That gives the union bargaining leverage, potentially frustrating Boeing’s effort to swiftly end a conflict that’s costing it an estimated $100 million each day. Companies like food-delivery provider DoorDash Inc. or Uber Technologies Inc. weren’t around 16 years ago, when Boeing’s largest union last walked off the job, shutting down its commercial airplane manufacturing for two months. Now, such companies, alongside a still-tight labor market, are providing possible options to sustain the strike.
Seeking To Counter China, US Awards $3 Billion For EV Battery Production In 14 States
The Biden administration is awarding over $3 billion to U.S. companies to boost domestic production of advanced batteries and other materials used for electric vehicles, part of a continuing push to reduce China’s global dominance in battery production for EVs and other electronics. The grants will fund a total of 25 projects in 14 states, including battleground states such as Michigan and North Carolina, as well as Ohio, Texas, South Carolina and Louisiana.
The grants announced Friday mark the second round of EV battery funding under the bipartisan infrastructure law approved in 2021. An earlier round allocated $1.8 billion for 14 projects that are ongoing. The totals are down from amounts officials announced in October 2022 and reflect a number of projects that were withdrawn or rejected by U.S. officials during sometimes lengthy negotiations. In recent years, China has cornered the market for processing and refining key minerals such as lithium, rare earth elements and gallium, and also has dominated battery production, leaving the U.S. and its allies and partners “vulnerable,’' White House economic adviser Lael Brainard said.
Nike Veteran Hill To Replace Donahoe As CEO
Nike said on last week that former senior executive Elliott Hill will rejoin the company to succeed John Donahoe as president and CEO, as the sportswear giant shakes up its leadership amid efforts to revive sales and battle rising competition. Hill was at Nike for 32 years and held senior leadership positions across Europe and North America where he helped expand the business to more than $39 billion, the company said.
Donahoe was tasked with bolstering Nike's online presence and driving sales through direct-to-consumer channels. The push initially helped the company build on the demand for athletic and leisurewear following the pandemic, resulting in Nike exceeding $50 billion in annual sales in fiscal 2023 for the first time. However, sales have since come under pressure and growth has slowed, according to estimates compiled by LSEG. A lack of innovative and appealing products has also recently tripped demand for Nike. Rival brands including Roger Federer-backed On and Deckers' Hoka are attracting shoppers and retail partners with sneakers considered more fashionable and trendy.
FedEx Quarterly Report Is An Early Indication The Parcel Sector’s Peak Shipping Season Will Be Dour
The early indications for the parcel sector’s peak shipping season are dour, at least as far as FedEx is concerned. The package giant’s revenue slipped 0.5% and profit tumbled about 27% to $790 million, missing analyst expectations in the fiscal quarter that ended Aug. 31. More significant for the company and the broader market FedEx also cut its outlook and now expects just low single-digit percentage growth in revenue in its current fiscal year. What CFO John Dietrich called “weaker-than-expected demand trends” come as parcel carriers are lining up operations for the seasonal rush leading up to the holidays.
FedEx is in the midst of a cost-cutting program that aims to slash spending by some $2.2 billion, part of an overhaul that includes blending its Express and Ground operations into a single, more efficient network. Average daily volume in the priority overnight services fell 5% from the same quarter a year ago while demand was largely flat in the deferred and home-delivery operations that included its former Ground unit. Demand at the premium end of the business also dropped in the previous quarter, suggesting FedEx is struggling right now to get momentum in the market.
Qualcomm Approached Intel About A Takeover In Recent Days, Source Says
Qualcomm has in recent days approached Intel to explore a potential acquisition of the troubled chipmaker, a source familiar with the situation said on Friday, in what could be a transformational deal in the sector but faces many hurdles. Qualcomm CEO Cristiano Amon is personally involved in the negotiations to acquire five-decade-old Intel, according to the source who was briefed on the matter. Another person familiar with the situation said Amon has been actively examining various options for a deal for the company.
A deal, should it go ahead, would likely invite scrutiny from antitrust regulators in the United States, China and Europe. Qualcomm may be required to divest parts of Intel in order to gain regulatory approvals. It is also unclear how Qualcomm would handle the takeover of Intel's contract manufacturing business. To build chips with an atomic level of precision, Intel has invested hundreds of billions of dollars over decades on its fabrication process and amassed tens of thousands of engineers to do it. Qualcomm has never operated a chip factory, or fab, and currently contracts the likes of Taiwan Semiconductor Manufacturing Co and uses designs and other technology supplied by Arm Holdings.
Spacex's Crew-9 Astronaut Flight For NASA Launches This Week. Here's How It Turned Into A Rescue Mission
This week, NASA is sending up a rescue mission to the International Space Station. On Thursday (Sept. 26), NASA astronaut Nick Hague and cosmonaut Aleksandr Gorbunov of Russia's space agency Roscosmos will launch to the International space Station (ISS) on SpaceX's Crew-9 mission. Two other NASA astronauts, Zena Cardman and Stephanie Wilson, both mission specialists, were supposed to be aboard as well.
But Wilson and Cardman were cut from the flight in order to make room for two other NASA astronauts, Butch Wilmore and Suni Williams, who are currently stuck on the station without a dedicated ride home. The duo now will hitch a ride home with Hague and Gorbunov when Crew-9 departs in February 2025, having spent roughly eight months in space. Williams and Wilmore were supposed to spend just 10 days or so in space. How did NASA find itself in this position?