Member Briefing November 30, 2022
House Moves to Avoid Rail Strike
On Monday evening, House Speaker Nancy Pelosi announced that lawmakers would begin the legislative process this week to conclude ongoing rail labor negotiations and avert a possible strike. Without a new labor contract in place between railroads and unions, a rail strike could take effect as soon as Dec. 9, with effects felt days earlier. A strike could cost the U.S. economy nearly $2 billion per day, according to industry sources, while also boosting inflation and grinding supply chains to a standstill. In addition to its impact on freight movements, a strike could wreak havoc on Amtrak and other commuter rail services, affecting up to 7 million travelers a day.
Pelosi said that the proposed legislation would impose a deal that unions generally approved in September. If Congress acts, it will end talks between the railroads and four unions that rejected the deal brokered earlier this fall. The news comes shortly after the NAM joined more than 400 organizations urging Congress to take action, calling on policymakers to exercise their authority by taking “immediate steps” to prevent a national rail strike.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- India Asked by Sanctions-Hit Russia for Parts for Key Sectors - Reuters
- ‘Losing is Not an Option’: Putin is ‘Desperate’ to Avoid Defeat in Ukraine as Anxiety Rises in Moscow - CNBC
- Inside Ukraine’s Blackouts: Fraught Operations, Candlelit Concerts, Anger With Russia - WSJ
- Finland Buys More Arms from United States as it Boosts Defences - Reuters
- U.S. Will Help Repair Decimated Ukraine Electric Grid - CNBC
- Nato Pledges to Provide More Weapons and Fix Power Grid - BBC
- Russia Blames Nuclear talks Pullout on 'Toxic' U.S. Behaviour - Reuters
- Russia Warns U.S. That Its Deeper Involvement in Ukraine Brings Growing Risks – US News
- Kremlin Adds Kalashnikovs, Patriotism and Respect for Soldiers to School Curriculum in Soviet-Era Throwback - WSJ
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Chinese Protesters Say Police Seeking Them Out
Over the weekend, thousands in China took to the streets demanding an end to Covid lockdowns - with some even making rare calls for President Xi Jinping to stand down. But on Monday, planned protests in Beijing did not happen after officers surrounded the assembly point. In Shanghai, large barriers were erected along the main protest route and police made several arrests. On Tuesday morning, police could be seen in both Beijing and Shanghai patrolling areas where some groups on the Telegram messaging app had suggested people should gather again. A small protest in the southern city of Hangzhou on Monday night was also quickly stopped with people swiftly arrested, according to social media footage verified by the BBC.
Chinese officials have implied that complaints over China's tough Covid curbs were a result of "arbitrary measures" rolled out at a local level, rather than as a result of national guidelines. China remains the only major economy with a strict zero-Covid policy, with local authorities clamping down on even small outbreaks with mass testing, quarantines and snap lockdowns.
Ram Charan: 4 Key Thoughts For What Comes Next
Bestselling author and one of the most in-demand advisors to companies in the world, Ram Charan has putting an exceptional, no-nonsense new book: Leading Through Inflation and Recession and Stagflation, which went on sale Yesterday. It’s essential reading for anyone who is managing an organization—or even part of an organization—and is trying to be right-now useful. From pricing and procurement to executive communication and leadership techniques, it sets the bar for practical leadership advice about our current moment.
Companies can weather economic unrest by keeping "both eyes on cash - and customer - and brand," as well as closely watching the moves of world leaders, moving toward sustainability and constantly planning, says Charan. "Have a separate team that's looking beyond three years and seeing how demographics change, how behaviors change, how new technology, new ideas and new research, new algorithms -- how do we hitchhike and create new opportunities, new revenue growth?"
U.S. COVID - Biden Says COVID Funding Legislative Priority
President Joe Biden said aid to Ukraine and funding to continue the fight against COVID-19 are priorities as he convened a meeting with congressional leaders on Tuesday to discuss legislative actions for the remainder of the year.
Key Republicans in the House and Senate are signaling opposition to President Biden’s request for another $10 billion in funding to battle COVID, a request Biden made two months after he declared "the pandemic is over."
China Touts Vaccination Progress as it Seeks Reopening Path
Mainland China announced significant progress Tuesday in getting Covid-19 booster shots for people “over age 80.” As of Monday, 65.8% of that age category had received booster shots, an official told reporters. That’s up from 40% as of Nov. 11, according to prior disclosures.
Tuesday’s announcement and press conference followed a weekend of unrest as pockets of people in cities across China vented their frustration with Covid policy. Local officials had tightened measures in some areas, in contrast with signals from Beijing earlier in the month that suggested China was on its way toward reopening. Mainland China’s latest Covid controls have negatively affected 25.1% of national GDP as of Monday, according to a Nomura model. That’s above the prior peak of 21.2% recorded in April during the lockdown in Shanghai.
ECB's Lagarde Says Inflation Hasn't Peaked, May Surprise
Euro zone inflation has not peaked and it risks turning out even higher than currently expected, European Central Bank President Christine Lagarde said on Monday, hinting at a series of interest rate hikes ahead. Her comments, along with remarks by Dutch central bank chief Klaas Knot earlier, were likely to dampen speculation that the ECB was about to take a gentler path with future rate increases.
Inflation in the euro zone hit a record 10.6% on an annualised basis last month, but economists polled by Reuters expect it to edge down to 10.4% in a flash reading for November due to be published this week. Contrary to some investors and even her own deputy, Luis de Guindos, Lagarde pushed back on expectations the high watermark for price growth had been reached. "We do not see the components or the direction that would lead me to believe that we've reached peak inflation and that it's going to decline in short order," Lagarde told the European Parliament.
German Inflation Eases, Boosting Calls for Slower ECB Rate Hikes
Germany followed Spain and Belgium in reporting slower inflation, offering ammunition to those who want the European Central Bank to ease the pace of interest-rate increases.Consumer prices in Europe’s largest economy rose 11.3% from a year earlier in November, down from October’s 11.6% jump, the statistics office said Tuesday, citing factors including energy costs for the deceleration. Analysts surveyed by Bloomberg had expected an advance of 11.3%.
In Spain, inflation abated for a fourth month and by more than anticipated, driven by declines in electricity and fuel costs, though a gauge of underlying prices quickened. The headline number in Belgium, meanwhile, slowed to 10.6%. Inflation data for the 19-nation euro zone are due Wednesday, with economists also estimating a slight moderation -- the first in 1 1/2 years. That reading will be crucial as ECB officials weigh a third straight 75 basis-point hike in borrowing costs or a smaller half-point move before a likely recession.
World Cup: US Defeats Iran 1-0, Advances to Round of 16 vs the Netherlands
Christian Pulisic's goal late in the first half gave the United States a dramatic 1-0 victory over Iran in Qatar on Tuesday, sending America through to World Cup knockout action.
The Americans advanced to round-of-16 play and will play Group A winner Netherlands at 10 a.m. EST Saturday at Khalifa International Stadium in Al Rayyan. Reaching the round of 16 marked a huge achievement for the U.S. program, which failed to qualify for the 2018 World Cup in Russia.
Toyota Exceeds Target as Oct. Global Production Rises 23%
Toyota Motor Corp. reported a 23 percent rise in October global vehicle output, beating its own target for a third month in a row, as the industry strives to get past persistent chip shortages that have hit production the last two years. The Japanese automaker produced 771,382 vehicles globally in October, above a downgraded target of 750,000 units and up 23 percent from the same month a year earlier, the company said in a statement on Tuesday.
But growth slowed from record monthly output of more than 887,000 cars manufactured in September, and Toyota continues to face supply chain disruptions as China battles nationwide COVID-19 outbreaks and implements restrictions and lockdowns.
Talks Kick Off on Global Plastic Trash Treaty
Despite decades of effort, plastic pollution is only getting worse -- a gloomy fact that representatives of almost 200 nations meeting in Uruguay Monday are determined to change. Delegates in the seaside city of Punta Del Este began charting a path to the first global treaty to combat plastic pollution. The meeting comes after the parties at the UN Environment Assembly in Nairobi in March agreed to create an intergovernmental committee to negotiate and finalize a legally binding plastics treaty by 2024.
By some estimates, a garbage truck's worth of plastic is dumped into the sea every minute. The meeting in Uruguay will last for five days, and is only a first step in the negotiations process. Another four global meetings are planned to carry the process forward. Technical matters, such as how to structure the two years of talks, or even what should be included in the treaty, are up for discussion.
Yield Curve Inversion Reaches New Extremes
Yields on longer-term U.S. Treasurys have fallen further below those on short-term bonds than at any time in decades, a sign that investors think the Federal Reserve is close to winning its inflation battle regardless of the cost to economic activity. A scenario in which short-term yields exceed long-term yields is known on Wall Street as an inverted yield curve and is often seen as a red flag that a recession is looming.
At a basic level, an inverted curve means that investors are confident that short-term rates will be lower in the longer-term than they will be in the near-term. Typically that is because they think the Fed will need to slash borrowing costs to revive a faltering economy. The current yield curve is “the market saying: I think inflation is going to come down,” said Gene Tannuzzo, global head of fixed income at the asset management firm Columbia Threadneedle.
Manufacturers Must Act Now To Maximize Depreciation-related Tax Breaks for 2022
As year-end nears, manufacturers are looking to get the most tax bang for their buck. In some cases, you may realize instant tax gratification by currently deducting the full cost of business property placed in service in 2022, even if it occurs as late as December 31. In this article, Dannible & McKee, LLP take a look at four key depreciation-related tax breaks available to manufacturers that you may want to consider.
Here are four key depreciation-related tax breaks available to manufacturers.
How Much Is Poor Mental Health Costing Your Company?
A recent Gallup poll found that 19% of workers rated their mental health as poor. Those workers will have nearly 12 days of unplanned absences compared to 2.5 days for workers not reporting mental health issues. The cost of that missed work is $47.6 billion annually in lost productivity. The cost of a missed day of work is estimated to be $340 per day for full-time workers, according to Gallup which conducted the poll from August 23- Sept. 7, 2022.
Looking at the demographics of this, both women and young workers report higher rates of struggling with mental health issues. Women (23%) are more likely to report poor or fair mental health than men (15%). Nearly one-third of young workers under the age of 30 (31%) do the same compared with 11% of those aged 50-64 and 9% of those aged 65 and over.
Supreme Court Likely to Toss New York Corruption Convictions
The often-fractious Supreme Court displayed unusual consensus Monday as it signaled an appetite to overturn fraud convictions in two New York corruption cases involving developers with ties to former Gov. Andrew Cuomo’s administration. Forthcoming decisions, which are expected by June, could further a decades-long trend at the high court of limiting what the justices have seen as overly expansive use of federal statutes to pursue alleged corruption.
Conservative and liberal justices strongly suggested both cases brought by anti-corruption crusading former U.S. Attorney Preet Bharara relied on faulty legal premises. Much of the debate during oral arguments Monday centered on how broadly the court would word opinions rejecting the theories prosecutors used to win guilty verdicts from juries.
Cyber Monday Sets Sales Record as Shoppers Splurge on Toys, Electronics
Discount-hunting shoppers snapped up more Pokemon cards, TVs and air fryers on Cyber Monday, pushing sales to $11.3 billion, making it the biggest U.S. online shopping day in history, according to data from Adobe Analytics. Sales, not adjusted for inflation, rose 5.8% from a year ago, per data from Adobe Analytics, which measures e-commerce performance by analyzing purchases at 85% of the top 100 internet retailers in the United States.
About 196.7 million shoppers made purchases during the five-day holiday period from Thanksgiving Day through Cyber Monday, the National Retail Federation said on Tuesday.
US Consumer Confidence Falls in November for 2nd Month
The Conference Board reported Tuesday that its consumer confidence index fell to 100.2 this month, down from 102.2 in October. November’s figure is the lowest since July, and likely reflected an uptick in gas prices earlier this fall, said Lynn Franco, senior director of economic indicators at the Conference Board. Despite the negative outlook, however, most Americans — particularly those with higher incomes — are still spending, fueling a generally healthy start to the winter holiday shopping season last weekend.
The data indicate Americans are taking a more gloomy view about the economy. Before the pandemic, the index regularly topped 120. With the cost of food, rent, clothing, and other essentials surging, inflation is near the worst in four decades, increasing 7.7% in October from a year earlier.