Analysts size up impacts of New Hampshire results
Today’s Digital Newspaper |
Part 2 of today’s dispatch:
— Rep. Kelly Armstrong (R-N.D.) announces run for North Dakota governor, forgoing re-election bid. Who will replace? Rep. Armstrong has decided to run for governor of North Dakota instead of seeking re-election to the House. This decision follows Republican Governor Doug Bergum’s announcement that he will not run for a third term. The future candidate for Armstrong’s House seat remains uncertain, but North Dakota is traditionally considered a Republican stronghold.
The ag sector is nervous about this House opening. They are nervous that Rick Becker, a former North Dakota lawmaker, is running for the state’s only seat in the U.S. House of Representatives. Becker, a plastic surgeon in Bismarck, announced his campaign on Monday. He received over 18% of the statewide vote in his unsuccessful U.S. Senate bid in 2022, when he ran as an independent against Republican Sen. John Hoeven, who won, and Democrat Katrina Christiansen, who is running for Senate again this year.
Of note: Becker is against sugar, crop insurance, the farm bill, etc.. Says one congressional contact: “Imagine ND sending someone like that to the House and what it would mean for ag.”
— Former Fed President Bullard expects rate cuts before inflation reaches 2%. Former St. Louis Fed President James Bullard anticipates that the Federal Reserve will initiate interest rate reductions before inflation reaches the 2% threshold. He suggests that these rate cuts could potentially be implemented as early as March. Bullard’s projection is based on the expectation that the core inflation rate, which excludes food and energy prices, will gradually decrease to approximately 2% before October. Headline personal-consumption expenditures price index fell to 2.6% in November 2023 compared to the previous year. The next report on this index is scheduled to be published on Friday.
— Sabato’s Crystal Ball: Trump clears the New Hampshire hurdle. Highlights of the group’s assessment:
- “While one can poke some holes in Donald Trump’s New Hampshire showing, he dispatched Nikki Haley in a state friendly to her coalition.
- “Haley is dominating with moderates and independents, but, as obvious as it may sound, winning conservatives and Republicans is the way to win the Republican presidential nomination. Trump has them.
- “President Biden avoided what could have been some negative short-term headlines by easily winning as a write-in candidate in what amounted to a beauty contest Democratic primary.”
— Amy Walter sizes up New Hampshire results for the GOP: “Haley succeeded in winning the college-educated, independent voters the state is famous for. But, Trump swamped the former South Carolina Governor among non-college, Republican and conservative voters. For example, according to the AP Voter Survey, Haley carried white college graduates by 17 points. But, Trump won White, non-college voters (who were 61% of the electorate), by 34 points. Haley swamped Trump among those voters who identified as independents by 24 points. But, Trump won Republican voters (who made up 49% of the electorate) by almost 50 points.”
So, where do things go from here? Says Walter: “Though Haley has vowed to press on to the South Carolina primary, it’s hard to believe she will have the momentum, money or institutional support she’ll need to make that happen.”
Walter’s bottom line: “Ultimately, the race for the GOP nomination is over. It is just a matter of when that becomes official.”
— Investors are starting to consider the potential implications of a Trump victory in the upcoming elections. Many anticipate significant deregulation, especially in antitrust measures, and a shift in support from clean energy companies to fossil-fuel producers. Holger Schmieding, an economist at Berenberg, suggests that a second Trump administration could lead to increased government spending and a lack of fiscal discipline similar to the current situation under President Biden. However, he doesn’t expect substantial changes in forecasts for U.S. economic growth under either a Trump or Biden second term.
— Oil refiner CVR Energy petitions EPA to overhaul RIN regulations, citing unlawful market. CVR Energy, an oil refining company, has submitted a petition to the Environmental Protection Agency (EPA) requesting a revision of the regulations governing Renewable Identification Numbers (RINs) under the Renewable Fuel Standard (RFS). Their petition seeks to impose limitations on who can trade these RINs. The primary argument put forth in the petition is that independent refiners are compelled to purchase RINs because they lack the blending capacity necessary to produce their own RINs, which are used to demonstrate compliance with RFS requirements.
According to CVR Energy, this situation has led to an unlawful RIN market, where RINs are traded at prices significantly higher than their production cost. They attribute this to the involvement of market speculators, criminals, large retail chain owners, and vertically integrated refiners who hold significant quantities of RINs. CVR Energy contends that by restricting participation in this market, RIN prices could be reduced, ultimately leading to lower fuel costs for consumers.
CVR Energy is relying on a federal appeals court ruling that rejected a portion of the EPA’s rationale for the existing RIN structure to support their case. It’s worth noting that similar arguments have been presented in the past but have been rejected by previous administrations.
— Federal Maritime Commission to hold public hearing on impact of Red Sea situation on shipping and supply chains. The Federal Maritime Commission (FMC) has scheduled a public hearing on Feb. 7, with a potential extension to Feb. 8, to address the impact of conditions in the Red Sea and Gulf of Aden regions on commercial shipping and global supply chains. The FMC’s primary goal is to gather input from stakeholders in the supply chain regarding how attacks on commercial shipping have disrupted operations, the measures taken in response to these incidents, and their resulting consequences.
This informal public hearing will take place at the Surface Transportation Board hearing room in Washington, D.C. Additionally, the FMC intends to use this session to collect information and identify any new issues related to these disruptions that may fall under Commission statutes and regulations.
— Hamas officials told international mediators that they are open to discussing a deal to release some of the kidnapped Israelis they are holding hostage in exchange for a significant pause in fighting, Egyptian officials said.
— Asia Inc. heads to Washington as focus turns to trade, tariffs and Trump. Amid sanctions, a tech war with China and an ongoing presidential election campaign, the U.S.'s next trade moves are becoming harder to predict for companies in Asia and across the world. Link to more via Nikkei Asia.
— German firms in China say economy is on ‘downward trajectory’. Most German companies in China think the Asian nation’s economy is declining and will take at least a year to rebound. For details, link to Bloomberg report.
— The reason China can’t stop its decline. The conventional wisdom on China has shifted but still misses the bigger picture. Link to Foreign Policy article.
— If Trump becomes next U.S. president, a major change will occur relative to Thrifty Food Plan (TFP), say sources. One contact said, “If Trump becomes president, I think one of the things USDA does is reverse Vilsack’s $250 billion TFP decision.” Vilsack’s interpretation of 2018 Farm Bill language on this topic allowed him to raise SNAP spending by a quarter trillion dollars.
Of note: The Congressional Budget Office (CBO)charged nothing for the provision in 2018 because nobody thought it would allow such a move. Now, CBO would give just $30 billion to remove the authority. One veteran Washington analyst says, “CBO like the GAO has policy prejudices that spill over into its judgements on costs. It also relies a lot on USDA for guidance on costs and that gets political. The system needs to be revamped to get honest score keeping.”
— Farmers block roads across France to protest regs, low wages. French farmers staged protests Wednesday across the country and in Brussels against low wages and what they consider to be excessive regulation, mounting costs and other problems. Farmers have also been turning road signs upside down to protest what they argue are nonsensical agricultural policies. Some were planning to protest in Brussels, home to EU headquarters, where French farmers’ union Rural Coordination called for a demonstration against the “ever-increasing constraints of European regulations and ever-lower incomes.” Link to more via the Associated Press.
KEY LINKS |
WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | Student loan forgiveness | Russia/Ukraine war, lessons learned | Russia/Ukraine war timeline | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | China outlook | Omnibus spending package | Gov’t payments to farmers by program | Farmer working capital | USDA ag outlook forum | Debt-limit/budget package |