News/Markets/Policy Updates: Jan. 6, 2025
Today’s dispatch includes updates on (1) Volatility in Asia, (2) 45Z program, (3) Mexican screwworm trade issue, (4) Major central U.S. winter storm heading East, (5) Urban growth and rural decline, (6) Justin Trudeau is expected to announce his resignation this week, and (7) The Washington Post reports that Trump’s aides are exploring a tariff plan targeting critical imports from all countries a shift from the broader 10% to 20% universal tariffs, but Trump says the report is incorrect.
— President-elect Donald Trump has invited members of the House Freedom Caucus (HFC) to meet with him at Mar-a-Lago on Friday, Jan. 10, according to Punchbowl News. The HFC, a group of conservative hardliners and some rebels, yielded to Trump and helped elect Mike Johnson (R-La.) speaker last week. Other lawmaker groups will meet with Trump next weekend. House Republican committee chairs, lawmakers interested in the state-and-local tax deduction and a group comprised of an ideologically diverse cross-section of lawmakers will all separately meet with Trump. — This year’s Jan. 6 election certification has been designated a “national special security event” to be overseen by the U.S. Secret Service. It’s the first time the vote-counting event has been given this classification, according to the agency, and allows for vast resources from the federal government and state and local partners to be used in the security plan. Another risk for Monday’s event is bad weather in Washington. “We’ve got a big snowstorm coming to DC and we encourage all of our colleagues: do not leave town,” House Speaker Mike Johnson (R-La.) said on Fox News’ Sunday Morning Futures. “So, whether we’re in a blizzard or not, we are going to be in that chamber making sure this is done.” Major General John C. Andonie, commanding general for the Washington, DC National Guard, told reporters that 500 soldiers would be on standby to support the certification. — Thune signals uncertainty over confirmation of Trump Cabinet picks. New Senate Majority Leader John Thune (R-S.D.) expressed uncertainty about whether all of President-elect Donald Trump’s Cabinet nominees will secure confirmation. Speaking on NBC’s Meet the Press, Thune emphasized a commitment to a “fair process” for the nominees but underscored the Senate’s constitutional role to “advise and consent,” particularly on national security appointments. Thune refrained from endorsing specific nominees, including controversial picks such as Kash Patel for FBI director, Tulsi Gabbard for director of national intelligence, and Pete Hegseth for Secretary of Defense. While he acknowledged being impressed by some candidates, he stressed the importance of rigorous questioning and transparency during the confirmation process. The Senate leader anticipates that Trump will swiftly secure key appointments but emphasized that nominees will need to demonstrate their qualifications to both the Senate and the public. Hearings on several Cabinet nominees, including Brooke Rollins, Trump’s USDA secretary nominee, will take place the week of Jan. 13. Link to The Week Ahead for more on this and details on this week’s agenda. Of note: Senate Majority Leader John Thune (R-S.D.) reportedly told President-elect Trump that Defense Secretary nominee Pete Hegseth “will have the votes to be confirmed,” per CBS News. — Johnson commits to fast-tracking Trump’s legislative agenda by May… perhaps the biggest bill in American history. Speaker Mike Johnson (R-La.), in an interview on Fox News’ Sunday Morning Futures, announced plans to pass a sweeping bill addressing President-elect Donald Trump’s priorities, including border security, tax cuts, and deregulation, by May. Johnson said he wants this bill done by the House the first week in April, with the goal of getting it to Trump’s desk by the end of the month, though Johnson acknowledged yesterday that the bill could slip into May. Channeling Trumpian lingo, Johnson has called it “one big, beautiful bill.” Using the Senate’s reconciliation process, Republicans aim to bypass Democratic opposition, but internal GOP divisions over the bill’s scope and timeline may pose challenges. · Key elements of the bill: Funding for mass deportations, extending 2017 tax cuts, addressing the debt ceiling, and dismantling federal regulations. Other reports note it will include unprecedented spending to tighten borders and remove people here illegally, energy deregulation. The bill reportedly will include Trump’s popular “no tax on tips” campaign promise. Of note: Trump publicly voiced support for this approach in a social media post Sunday. Trump said Republicans must “Secure our Border, Unleash American Energy, and Renew the Trump Tax Cuts.” The president-elect also called for his “no tax on tips” pitch to be in the bill. Trump said the cost of these policies will “all be made up with tariffs.” Republicans face internal debates on whether consolidating or segmenting Trump’s priorities is the most viable path forward. Trump’s 2017 tax cuts are set to expire at the end of this year without legislative action. — Republicans are considering several programs and areas to cut funding or reduce spending to help pay for tax cuts in 2025. Here are some possibilities being mentioned: Welfare Programs Environmental Regulations Green Energy Subsidies Federal Spending Cuts Tariffs Other Potential Areas Of note: While these are areas Republicans are considering, the specific cuts and their extent may change as negotiations progress and the political landscape evolves. — Trudeau expected to resign as Liberal Party leader amid political turmoil. Canadian Prime Minister Justin Trudeau is expected to announce his resignation as Liberal Party leader in the coming days, with reports suggesting the announcement could come as early as Monday (link). This development precedes a critical national caucus meeting scheduled for Wednesday. Reasons for resignation The resignation is expected before the caucus meeting to avoid appearing as though Trudeau is being ousted by his MPs. It is unclear if Trudeau will step down as Prime Minister immediately or remain until a new leader is selected. The Liberal Party’s national executive plans to meet this week, likely after the caucus meeting, to discuss the leadership transition. Trudeau has served as Prime Minister since 2015 and has led the Liberal Party since 2013. His resignation would mark a significant political shift, given his central role in reviving the party during a period of decline. Finance Minister Dominic LeBlanc is a potential interim leader and Prime Minister. Trudeau’s resignation could trigger calls for an early election to address the political landscape amid a new U.S. administration. — Central U.S. winter storm brings “heaviest snowfall in a decade.” A powerful winter storm swept through the central United States on Sunday, unleashing snow, ice, and dangerously cold temperatures that disrupted travel and prompted emergency responses across multiple states. The National Weather Service warned that some areas could experience the “heaviest snowfall in at least a decade,” with forecasts predicting over 8 inches of snow in regions north of Interstate 70. “For locations in this region that receive the highest snow totals, it may be the heaviest snowfall in at least a decade,” the weather service stated. The storm caused significant travel hazards, blanketing roadways in Kansas, western Nebraska, and parts of Indiana. Indiana activated its National Guard to assist stranded motorists as heavy snowfall covered major highways. “It’s snowing so hard, the snow plows go through and then within a half hour the roadways are completely covered again,” Indiana State Police Sgt. Todd Ringle remarked. Governors in Missouri and Arkansas declared states of emergency as blizzard conditions worsened, and Kansas officials reported nearly 10 inches of snow by Saturday, with totals expected to exceed 14 inches in some areas. Air travel was also heavily impacted, with nearly 200 flights canceled at St. Louis Lambert International Airport. The storm extended its reach into the Ohio Valley and Mid-Atlantic states, bringing frigid conditions as far south as Florida. “Temperatures could be 12 to 25 degrees below normal,” forecasters cautioned, with wind chills creating dangerously cold conditions. As millions braced for the storm, Amtrak canceled numerous rail services, and schools in Indiana, Maryland, and Kentucky announced closures. Jefferson County Public Schools in Kentucky, one of the largest districts affected, declared a traditional snow day without online learning. Link to an Associated Press report for more details. |
| FINANCIAL MARKETS |
— Equities today: Asian and European stock indexes were mixed to lower overnight. U.S. stock indexes are pointed toward solidly higher openings after ending the longest losing streak since April on Friday. In Asia, Japan -1.5%. Hong Kong -0.4%. China -0.1%. India -1.6%. In Europe, at midday, London +0.1%. Paris +1.8%. Frankfurt +1.2%.
Equities Friday and for the week: The Dow gained 339.86 points, 0.8%, on Friday to close at 42,732.13. The S&P 500 picked up 73.92 points, 1.3%, to finish at 5,942.47, while the Nasdaq jumped 340.88 points, 1.8%, to end the session at 19,621.68. For the week, the Dow retreated 0.6%, the S&P 500 fell 0.5%, and the Nasdaq gave up 0.5%.
— Nippon Steel sues Biden over blocked U.S. Steel Deal, alleges political favoritism. Nippon Steel and U.S. Steel have filed lawsuits against President Joe Biden and others, claiming unlawful political interference in blocking a $14.9 billion buyout of U.S. Steel. The Japanese company alleges Biden’s decision was influenced by his political ties to labor unions ahead of the 2024 election. Additionally, Nippon Steel accuses Cleveland-Cliffs, its CEO, and the USW union president of anticompetitive actions to monopolize U.S. steel markets. The case marks a historic lawsuit by a Japanese company against a U.S. president, drawing sharp criticism from Japan’s government over its implications for U.S./Japan investment relations.
— Bayer concludes Roundup litigation in Australia with legal victory. Bayer has closed all Roundup-related litigation in Australia after the Federal Court discontinued the Fenton class action on Jan. 3, 2025. This decision follows Bayer’s earlier win in the McNickle case, where a 322-page ruling found no evidence linking glyphosate, Roundup’s active ingredient, to non-Hodgkin lymphoma (NHL). The ruling aligns with global scientific assessments, including those by the Australian Pesticides and Veterinary Medicines Authority, which deem glyphosate non-carcinogenic. While Bayer celebrates this victory, global challenges persist, particularly in the U.S., where the company is pursuing legal strategies to counter ongoing claims.
— Dollar drops 1% as Trump administration mulls softer tariffs; markets eye labor data and Fed Insights. The dollar index fell 1% to around 108 on Monday, retreating from its two-year highs. Reports suggest the Trump administration is considering tariffs on critical imports instead of universal tariffs. Traders await labor market data, Federal Reserve speeches, and December meeting minutes for policy cues, with markets having fully priced just one reduction in the fed funds rate this year — CME Fed funds futures, based on the highest percentage probabilities, expect one rate hike in 2025 with the probabilities very close between what would be another cut later this year. The yen was the sole loser among Group-of-10 currencies against the greenback. The Canadian dollar got a lift from a Globe and Mail report that Prime Minister Justin Trudeau is likely to announce his resignation as leader of the Liberal Party this week.
— Asia volatility. As the first full trading week of 2025 begins in Asia, investors are grappling with several significant developments that are likely to shape market sentiment and economic outlook in the region.
China’s Currency and Bond Market Turmoil
The Chinese yuan has come under intense pressure, weakening past the psychological milestone of 7.3 per dollar for the first time since late 2023. This depreciation comes despite the People’s Bank of China’s (PBOC) efforts to support the currency through its daily reference rate. The PBOC’s struggle to maintain yuan stability reflects persistent concerns about China’s economic growth and escalating trade tensions with the United States, particularly as President-elect Donald Trump threatens higher tariffs. (Note: See related item below on the yuan.)
Simultaneously, Chinese government bond yields have plummeted to unprecedented levels, with the 10-year yield falling below 2% for the first time ever. This dramatic decline in yields underscores deepening concerns about deflation in the world’s second-largest economy. The deflationary pressure is particularly acute, with producer prices declining for 26 consecutive months, dropping 2.5% year-over-year in November.
South Korea’s Political Crisis
South Korea is embroiled in a severe political crisis that has thrown the country into chaos. Following the impeachment of President Yoon Suk Yeol on Dec. 14 and his replacement Han Duck-soo on Dec. 27, the situation has further deteriorated. An attempt to arrest Yoon on insurrection charges was abandoned on Jan. 3 after a tense six-hour standoff, deepening the political uncertainty.
This political turmoil has had immediate economic repercussions. The South Korean won has plunged to its lowest level against the U.S. dollar in almost 16 years, and the stock market has tumbled. The crisis is compounded by a tragic plane crash on Dec. 29, which prompted a national period of mourning until Jan. 4.
Blocked U.S./Japanese Corporate Merger
In a significant move, President Joe Biden blocked the $14.9 billion acquisition of U.S. Steel by Japan’s Nippon Steel. This decision, based on national security grounds, marks a rare instance of a president using the Committee on Foreign Investment in the United States (CFIUS) to prevent a transaction without Chinese ownership ties.
The blocked merger has broader implications for U.S./Japan relations and foreign investment in the United States. It represents a departure from the long-standing American practice of welcoming foreign investment and could strain diplomatic ties with Japan, a key U.S. ally. The decision also raises concerns about potential legal challenges, as Nippon Steel had indicated readiness to pursue legal action if the deal was obstructed.
Bottom line: As markets open for the first full trading week of 2025, these developments are likely to contribute to increased volatility and uncertainty across Asian markets, with potential ripple effects on global economic sentiment.
— China moves to stabilize yuan after slide past 7.3 per dollar, which raised concerns about accelerated depreciation. The People’s Bank of China (PBOC) set a stronger daily reference rate and signaled determination to prevent further weakening. State-owned banks were seen selling dollars to support the currency, while Beijing plans to sell more bills in Hong Kong to tighten offshore liquidity. Analysts suggest the PBOC is reinforcing its stance ahead of potential economic pressures, including trade frictions with the U.S. and capital outflows. Despite interventions, bearish market sentiment persists.
— Goldman Sachs no longer sees gold reaching $3,000 an ounce by the end of 2025, pushing the forecast to mid-2026 on expectations the Fed will make fewer interest-rate cuts. Even so, investors see plenty of reasons to remain bullish after a 27% rally last year.
— Fed’s rate cuts clash with rising Treasury yields, strengthening dollar. Despite the Federal Reserve’s recent rate cuts totaling 150 basis points, long-term U.S. Treasury yields have risen by 100 basis points, signaling shifts in economic growth expectations, inflation outlooks, and Fed policy repricing. This yield increase has bolstered the U.S. dollar through enhanced yield differentials, safe-haven demand, and carry trade appeal. However, these dynamics tighten financial conditions, strain U.S. export competitiveness, and create global ripple effects, particularly in emerging markets. The resulting market volatility has impacted equity valuations and bond market stability, leaving investors and policymakers navigating a complex economic landscape.
— Richmond Fed President Tom Barkin said there are still upside risks to inflation and growth, underscoring his preference to keep interest rates restrictive for longer. While Barkin said he believes the central bank’s current level of rates is restraining the economy enough to continue lowering inflation in 2025, he remains wary of potential price pressures. “I think there is more upside risk than downside risk,” Barkin said Friday to reporters following prepared remarks in Linthicum Heights, Maryland. “So, I put myself in the camp of wanting to stay restricted for longer.”
He expressed a positive outlook for the U.S. economy in 2025, citing strong consumer spending, a stable labor market, and high business optimism. Speaking at the Maryland Bankers Association forum, he highlighted risks from persistent inflation and uncertainties surrounding the incoming Trump administration’s policies on trade, taxes, and immigration. Barkin emphasized the Federal Reserve’s readiness to adapt policy to address potential economic shifts.
— Fed’s Kugler expresses caution over inflation ‘bump.’ Federal Reserve Governor Adriana Kugler noted optimism about the U.S. economy’s resilience but stressed the need to confirm inflation remains on a downward trajectory. Speaking on CNBC, she referred to recent “bumps” in inflation, including one earlier in 2024, emphasizing the importance of ensuring these are temporary fluctuations.
While inflation has eased significantly since 2022, progress toward the Fed’s 2% target has been uneven. The Fed’s preferred inflation gauge rose 2.4% year-over-year in November, the same level as in June. Kugler highlighted the labor market’s resilience, with unemployment ticking up to 4.2% in November but remaining historically low.
The Fed capped 2024 with a quarter-point interest rate cut, signaling caution in adjusting rates further in 2025. Kugler also addressed potential economic uncertainties tied to President-elect Donald Trump’s proposed tariffs, stating the Fed is evaluating a broad range of scenarios.
— Economic impact of Trump’s policies: Growth, tariffs, and inflation risks. Donald Trump’s economic policies could bring mixed outcomes, according to analysts His plan to cut taxes and reduce regulations is projected to maintain GDP growth at around 3% this year, benefiting American businesses in the short term. However, proposed tariffs on key trading partners might dampen global growth in 2025, potentially triggering economic headwinds.
Additionally, the potential dismantling of the Inflation Reduction Act (Climate Act) poses significant risks, threatening billions in tax credits and sparking lobbying efforts, even from Big Oil executives and agribusiness executives, to preserve the law.
Inflation remains a wildcard. Experts warn that Trump’s policies might stoke inflationary pressures, unsettling the Federal Reserve and bond markets. Any sharp rise in 10-year Treasury yields could force the administration to scale back aggressive growth strategies. In response, the Fed has already revised its 2025 rate cut projections downward amid rising inflation concerns.
| AG MARKETS |
— Ag markets today:
Soybeans lead overnight price gains. Corn, soybeans and wheat recouped a portion of last Friday’s sharp losses during the overnight session, led by double-digit gains in the soybean market. As of 7:30 a.m. ET, corn futures were trading 4 to 5 cents higher, soybeans were mostly 12 to 13 cents higher, and wheat was 4 to 6 cents higher. The U.S. dollar index was more than 800 points lower (see related item above) and front-month crude oil futures are around 40 cents higher.
Feedlots continue to have leverage. Packers paid up for cash cattle for a seventh consecutive week and last week’s average price likely topped the record from July 2024. Despite negative margins, packers have had to raise cash bids to entice feedlots to sell cattle. Feedlots remain well positioned, though packers have fresh contracted supplies available this week.
Cash hog index marks new seasonal low. The CME lean hog index is down another 87 cents to $83.12 as of Jan. 2, the fifth straight daily decline and below the December low, signaling a seasonal low has not yet been posted. February lean hog futures finished last Friday $2.345 below today’s cash quote.
— Agriculture markets Friday and for the week:
• Corn: March corn futures plunged 8 3/4 cents to $4.50 3/4 and settled near session lows. That marked a 3 1/4 cent loss on the week.
• Soy complex: March soybeans fell 20 1/4 to $9.91 3/4 and marked a 2-cent weekly loss. March soymeal plunged $11.30 to $308.60 and down $1.90 on the week. March soyoil closed down 34 points at 39.93 cents and down 7 points week-over-week.
• Wheat: March SRW wheat futures fell 16 1/2 cents to $4.29 1/4, nearer the daily low and set a contract low. For the week, March SRW dropped 17 1/4 cents. March HRW wheat lost 12 3/4 cents to $5.39, nearer the daily low and closed at a contract low close. On the week, March HRW fell 15 1/2 cents. March spring wheat futures fell 11 3/4 cents to $5.77 3/4 and marked a weekly loss of 17 1/2 cents.
• Cotton: March cotton fell 91 points to 67.66 cents and was down 123 points on the week.
• Cattle: February live cattle futures rose 45 cents to $194.05, nearer the daily low after hitting a 14-month high early on. For the week, February cattle rose $3.40. March feeder cattle futures lost $2.025 to $264.175 and nearer the daily low after hitting a contract high early on. On the week, March feeders rose $3.625.
• Hogs: Nearby February ended the day having slipped 37.5 cents to $80.775. That represented a weekly drop of $3.375.
— India’s wheat price hit record high. India’s wheat prices jumped to a record high on Monday due to dwindling supplies amid robust demand from flour mills that are struggling to secure wheat to operate at full capacity, industry officials told Reuters. In December, New Delhi lowered the limit on wheat stocks that traders and millers can hold to help boost availability and moderate prices. But the curbs failed to bring down prices, which were trading around 33,000 rupees ($384.66) per metric ton in New Delhi, up from 24,500 rupees in April and far above the government fixed minimum support price of 22,750 rupees for last season’s crop. The state-run Food Corporation of India is selling 100,000 MT of wheat to bulk consumers every week, but this is not sufficient to meet demand.
— Indonesia plans to regulate feed wheat imports. Indonesia plans to impose a quota on wheat imports for animal feed to protect local corn farmers, its senior minister for food affairs said. The government soon will hold a meeting to set the feed wheat import quota.
— Thai rice exports expected to fall 25%. Thailand’s rice exports will likely drop by 25% in 2025 from last year, the Thai Rice Exporters Association, told Reuters. More competition from India and less demand from Indonesia is attributed to the expected sharp decline.
| ENERGY MARKETS & POLICY |
— Energy markets today: Brent and WTI crude oil futures are up slightly. Both Brent and WTI crude oil prices remain near two-month highs, with weekly gains of over 3% for Brent and nearly 5% for WTI recorded in the previous week.
— Energy markets Friday; weekly change: Oil prices continued their upward trajectory on Friday, with Brent crude climbing 0.9% to $76.62 per barrel and U.S. West Texas Intermediate (WTI) gaining 1.5% to $74.24. For the week, Brent rose 3.3%, while WTI garnered a 5% gain. The surge was driven by colder weather in Europe and the U.S., increasing heating oil demand, and optimism over China’s economic measures, including wage hikes and treasury bond funding to bolster investment and spending.
— Biden enacts historic ban on offshore drilling, protecting 625 million acres of U.S. waters. In a landmark move during his final weeks in office, President Joe Biden has announced a sweeping ban on future offshore oil and gas drilling along most of the U.S. coastline. The ban protects approximately 625 million acres of ocean, including the entire East Coast, the eastern Gulf of Mexico, the Pacific coast off Washington, Oregon, and California, and portions of Alaska’s Northern Bering Sea.
Invoking authority under Section 12(a) of the Outer Continental Shelf Lands Act, Biden has ensured the ban’s permanence, aligning with his climate goals to conserve 30% of U.S. lands and waters by 2030. Environmentalists celebrate the action as a major win, while the oil industry criticizes it as counterproductive. This decision may create legal and political challenges for the incoming Trump administration, which aims to expand fossil fuel production.
— New Treasury rule expands clean hydrogen tax credit opportunities for biogas producers. The U.S. Treasury Department’s new regulations for the Clean Hydrogen Production Tax Credit (45V) broaden eligibility for hydrogen producers utilizing biomethane or renewable natural gas (RNG). Key provisions include:
- Expanded sources: Inclusion of a wider range of biogas and fugitive methane sources, like digesters processing animal waste.
- Lifecycle emissions: Tax credit value depends on lifecycle greenhouse gas emissions, favoring cleaner production methods.
- Credit tiers: Four tiers, with up to $3.00 per kilogram for the lowest emissions.
Digesters capturing methane from manure may now contribute to clean hydrogen, but restrictions like a 52% methane content requirement and a 2024 construction beginning deadline pose hurdles. (Projects must begin construction prior to the end of calendar year 2024 to claim the credit.)
Mixed industry reactions highlight both optimism and concerns over potential limitations on RNG’s role in the clean hydrogen economy. The U.S. Chamber of Commerce stated that while the rule provides some additional flexibility, it “still will leave billions of dollars of announced projects in limbo.” The RNG Coalition cautioned that “certain provisions in the rule may significantly limit the potential of RNG to contribute to a globally competitive clean hydrogen economy.”
— 45Z program stakeholders still waiting on details. Biofuel producers await more information regarding tax credits and implementation rules for clean fuel production via the 45Z program. The clean fuel production credit took effect Jan. 1, replacing and consolidating expiring tax breaks for low-greenhouse-gas fuels.
· Lack of guidance: Final rules for the clean fuels credit haven’t been released and aren’t expected to be finalized before President Joe Biden leaves office. “Treasury anticipates issuing guidance before the end of the administration that will enable eligible producers to claim the 45Z credit for 2025,” agency spokesperson Michael Martinez said in a statement. Treasury has put out some guidance focused on things like taxpayer registration for claiming the credit. That means the incoming Trump 2.0 administration will have to finalize rules for the program. This timeline leaves many questions unanswered as the credit comes into effect.
· The absence of finalized rules for the 45Z credit is causing major uncertainty in the industry.
· Credit calculation: Companies face the prospect of generating credits without knowing their value due to the lack of guidance on emissions factor calculations. The 2022 Inflation Reduction Act/Climate Act aimed to be technology-neutral, encouraging low-carbon fuel production and calculating the tax break value not on the fuel type, but on a carbon intensity score of the product it’s made from and the way it’s produced.
· Some stakeholders want to know whether the credit applies only to domestic products. Others are concerned over what emerging practices should be considered for eligibility, who can collect compliance data, or if 45Z gets extended beyond its current 2027 expiration.
· Producer vs. blender credits: The shift from blender to producer credits has caused concern among some industry members, particularly those representing blenders like BP, Chevron, and Shell.
· Potential credit value reduction: Some reports suggest that fuels made from vegetable oils derived from feedstocks like canola, corn, or soybeans may receive lower credit values under the new carbon intensity scoring system. But this has not been confirmed and awaits official regulations.
· Permitting: Industry contacts tell us what most observers do not know is how long it takes the U.S. government (usually EPA) to either approve or reject a permitting license for projects. Industry stakeholders hope the Trump 2.0 administration will accelerate permitting timelines and make them more efficient.
| TRUMP 2.0 ADMINISTRATION |
— Trump expands White House team ahead of inauguration. President-elect Donald Trump has announced new appointments to his White House staff, with Chief of Staff Susie Wiles leading the team. Key additions include:
- Stanley Woodward, a prominent attorney, as Assistant to the President and Senior Counselor. Woodward, known for representing Trump associates in legal matters, brings extensive experience in corporate law and pro bono work.
- Robert Gabriel Jr., a former aide and policy advisor, will serve as Assistant to the President for Policy.
- Nicholas Luna, Trump’s former personal aide, has been named Deputy Chief of Staff for Strategic Implementation, focusing on communications and presidential scheduling.
- William “Beau” Harrison, recognized for his operational expertise during the Trump administration’s first term, will return as Deputy Chief of Staff for Operations.
These appointments underscore Trump’s focus on assembling an experienced and loyal team as he prepares to assume office on Jan. 20.
— Susie Wiles aims for a no-drama West Wing as first female White House Chief of Staff. In an interview with Axios, incoming White House chief of staff Susie Wiles outlined her vision for a “no-drama zone” in the West Wing under President-elect Donald Trump’s administration. Wiles, nicknamed “the Ice Maiden” by Trump, emphasized teamwork and discipline: “My team and I will not tolerate backbiting, second-guessing inappropriately, or drama. These are counterproductive to the mission.”
Wiles, 67, brings a reputation for organization and loyalty, having helped orchestrate Trump’s highly disciplined 2024 campaign. She will be the first woman to serve as White House chief of staff, a historic milestone.
Her focus is on leveraging Republican control of Congress to deliver on Trump’s promises, including energy production, regulatory rollbacks, low taxes, and border security. Wiles plans for a swift start, prioritizing public support and efficiency in achieving policy goals. She calls the first two years before the 2026 midterms critical for advancing the administration’s agenda. “Promises made and kept” is the guiding mantra for the 47th administration, Wiles says, as she prepares to bring her “all gas, no brakes” strategy to Washington.
— Trump taps tax policy veteran Ken Kies for key Treasury role. President-elect Donald Trump selected Ken Kies, a seasoned tax lobbyist and former chief of staff for the Joint Committee on Taxation, to spearhead tax policy at the Treasury Department. Kies is expected to play a pivotal role in extending the GOP’s 2017 tax cuts, leveraging his deep expertise in tax code and legislative strategy. His appointment has garnered praise from Republicans, including Ways and Means Chair Jason Smith (R-Mo.), who highlighted Kies’ extensive experience as crucial for navigating a narrowly divided Congress.
— Sergio Gor expected to lead Presidential Personnel Office in Trump 2.0. Sergio Gor, president and co-founder of Donald Trump Jr.’s publishing company, is slated to head the Presidential Personnel Office in the upcoming Trump administration. Tasked with vetting and appointing roughly 4,000 officials, Gor is described by former congressman Matt Gaetz (R-Fla.) as “the general manager of the government.” At 38, Gor has played a pivotal role in Trump’s transition process, leveraging his long-standing loyalty and influence within Trump’s inner circle to prioritize candidates based on their allegiance to the president.
| TRADE POLICY |
— Poilievre courts Trump with energy trade plan amid Canada/U.S. tensions. Pierre Poilievre, Canada’s Conservative leader and a leading challenger to Prime Minister Justin Trudeau, outlined a bold energy strategy to address U.S. trade concerns. Poilievre proposed ramping up oil, natural gas, and electricity exports to the U.S. while expediting domestic resource project approvals. In a pitch to President-elect Donald Trump during an interview with right-wing Canadian influencer Jordan Peterson, Poilievre suggested that a “great deal” could benefit both nations, despite Trump’s recent sharp criticisms of Canada’s trade practices.
Poilievre highlighted Canada’s oil discounts to the U.S. as self-inflicted and argued for diversifying Canada’s export capabilities. His plan also includes collaborating with energy-rich provinces and enhancing Arctic security through increased defense spending, financed by expanded trade.
Of note: The U.S. trade deficit in goods with Canada was $50.5 billion through the first 10 months of 2024. It would be larger, but Canadian crude is sold cheaply to U.S. refineries, particularly in the Midwest.
Bottom line: Poilievre’s strategy seeks to strengthen ties with the U.S. while addressing Trump’s concerns over trade deficits and security commitments.
— U.S. ban on Mexican feeder cattle imports remains in effect amid screwworm concerns. The U.S. ban on feeder cattle imports from Mexico, implemented in late November 2024 due to the detection of New World screwworm (NWS) in Chiapas, Mexico, remains in place as of Jan. 5. USDA’s Animal and Plant Health Inspection Service (APHIS) temporarily halted imports of live animals from or transiting through Mexico, citing the severe threat posed by NWS, which infests the living tissue of warm-blooded animals.
The ban has significantly impacted the U.S. cattle market:
- Higher feeder cattle prices: Prices have been trending upward since the ban.
- Reduced imports: Late 2024 saw a decline of 150,000–170,000 head of imported cattle.
- Supply implications: January 2025 feeder cattle inventories are projected to drop by 1.2 million head.
- Long-term risks: The ban exacerbates pre-existing supply challenges in the U.S. beef market, which faces reduced output in 2025 and 2026 due to a smaller cow herd.
USDA-APHIS is collaborating with Mexico and Central American partners to control the NWS spread and reestablish a biological barrier. However, the ban will remain in effect until new screening protocols for safe trade are implemented.
Recall that APHIS recently approved $165 million in emergency funding through the Commodity Credit Corporation to increase USDA’s efforts to control the spread of screwworm. They’ve also warned livestock producers along the southern border to look out for signs of screwworm infestations. USDA Secretary Tom Vilsack recently noted that the risk of screwworm will be among USDA’s top animal disease priorities, along with the response to the avian influenza outbreak still spreading through dairy herds across the country.
| FOOD INDUSTRY |
— California Gov. Newsom acts on food safety amid national policy shifts. California Governor Gavin Newsom issued an executive order targeting ultra-processed foods, positioning the state as a pioneer in food safety and public health. This move builds on California’s recent bans on specific additives and school snacks.
The announcement comes as President-elect Donald Trump seeks Senate confirmation for Robert F. Kennedy Jr. as Secretary of Health and Human Services. Kennedy, known for his controversial stances, has pledged to overhaul the U.S. food system.
Newsom’s directive instructs state agencies to propose measures to curb ultra-processed foods’ health impacts, including warning labels and restrictions for government food benefit recipients.
— GLP-1 drugs prompt 6% drop in grocery spending, study finds. Households with at least one GLP-1 medication user reduced grocery spending by 6% within six months, with higher-income households experiencing a nearly 9% decline, according to a study by Cornell University and Numerator (link). Purchases of calorie-dense, processed foods such as chips and cookies were most impacted, with reductions averaging between 6.7% and 11.1%.
The shift in consumer behavior is influencing food companies like Nestlé and Conagra Brands, which are adjusting their offerings to cater to changing appetites. For instance, Nestlé introduced its Vital Pursuit line for weight-conscious consumers, and Conagra launched “GLP-1 friendly” labeling for Healthy Choice products.
Outlook. With obesity drug adoption rising — 15 million U.S. adults are already users — analysts predict the global market for these medications will reach $105 billion by 2030. As grocery basket compositions trend healthier, the food industry faces significant transformation in product development and marketing strategies.
| TRANSPORTATION & LOGISTICS |
— Rail traffic in 2024 grew, but from subdued levels in 2023. Also, 2024 volumes were still below 2022 levels (see chart below), and far below the industry’s 2018 peak.
— The East Coast port labor situation is once again teetering on the brink of a potential strike, raising concerns for the maritime industry and supply chains. The current situation:
Renewed Strike Threat
The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) are at an impasse in their contract negotiations, reviving the possibility of a work stoppage at East Coast and Gulf Coast ports. This development comes after previous tensions had seemingly eased, catching many in the industry off guard.
Timeline and Talks
The ILA will resume contract negotiations with port employers on Tuesday, Jan. 7, as the union threatens to strike at midnight on Jan. 16.
Key Issues
- Automation concerns: The primary point of contention remains the implementation of automation at port facilities. The ILA strongly opposes increased automation, viewing it as a threat to jobs and worker safety.
- Wage disputes: Wage negotiations are likely another significant factor in the ongoing disagreement between the union and port operators.
Potential Impact
A strike would affect major ports from Maine to Texas, potentially disrupting the flow of goods and causing significant economic repercussions. While most economists predict limited economic impact if the strike is brief, prolonged disruption could lead to ship congestion, increased container rates, and shortages, with potential losses ranging from $1 billion to $5 billion daily. Key industries that could be impacted include:
- Retail
- Manufacturing
- Agriculture
— Amazonas state modernizes port infrastructure to boost grain exports. Starting this year, Amazonas state will witness significant upgrades in port infrastructure, with Grãos Pará investing R$180 million ($29.1 million) in 27 grain barges, push boats, and enhanced mooring systems. This initiative, funded by Brazil’s Merchant Marine Fund (FMM), is set to create 710 direct jobs and strengthen the Port of Manaus as a key hub for grain exports. Link for details.
Amazonas is a state located in the northern region of Brazil. It is the largest state in Brazil by area and is predominantly covered by the Amazon Rainforest. Its capital and largest city is Manaus, which is a major port and economic hub for the region.
Complementing this, the Ministry of Ports and Airports has greenlit 20 projects across multiple states, with over R$10 billion ($1.617 billion) in investments projected to generate 8,800 jobs nationwide. Sustainability and technological advancements, including hybrid engines and clean fuel initiatives, are integral to these developments, aligning with Brazil’s energy transition goals.
According to Fernando Pimentel, General Coordinator at the ministry, the FMM is crucial for reducing logistics costs and integrating Brazil into global trade. These measures not only modernize infrastructure but also bolster Brazil’s standing in international markets while minimizing environmental impacts, analysts note.
| U.S. POPULATION TRENDS |
— Urban growth and rural decline. The latest census data (link; change in population, 2014-2018 to 2019-2023) reveals a sharp contrast in population dynamics across Texas, Florida, and Iowa, underscoring broader demographic trends nationwide. Rapid urban growth juxtaposed with rural decline defines the shifting population landscape.
Texas: A Tale of Two Growth Patterns
- Urban and suburban boom: Texas added nearly 563,000 residents, surpassing 31 million in total population. Urban areas like the Dallas-Fort Worth metroplex are surging, with counties such as Kaufman (7.6% growth) and Collin adding over 36,000 residents. Harris County led the nation in numeric growth, gaining 53,788 people.
- Rural decline: Many rural Texas counties saw population losses, highlighting the uneven distribution of growth.
Florida: Sustained Statewide Growth
- Florida gained 467,000 new residents, with 96% of its counties experiencing growth. Polk County ranked fifth nationally in numeric gains, adding nearly 30,000 residents.
- The state saw significant natural decrease, emphasizing migration as the key driver of its population boom.
Iowa: Emerging Growth Center
· Iowa’s overall population grew modestly by 0.23%, reaching over 3.2 million. Certain counties are expanding rapidly, bringing the state into focus for future growth potential.
These demographic shifts bring critical challenges and opportunities:
- Infrastructure pressure: Urban counties face the strain of expanding services.
- Economic shifts: Growth centers may drive further urbanization.
- Political representation: Population changes impact electoral districts.
- Rural challenges: Declining areas may struggle with economic sustainability.
- Housing markets: Surging demand in growing areas affects affordability.
Bottom line: Strategic, region-specific planning will be essential to address these trends and ensure balanced development across urban and rural regions.
| RUSSIA & UKRAINE |
— Ukraine and Russia escalate conflict with fresh offensives in Kursk and Kurakhove. Ukraine has launched a significant new offensive in Russia’s Kursk region, following earlier gains made during the summer. However, Ukrainian forces have since lost approximately 40% of the territory they had seized. Russia responded with claims of a large-scale counteroffensive in Kursk. Separately, Russia’s Ministry of Defense announced the capture of Kurakhove, a strategically important town in eastern Ukraine. The developments mark an intensification of hostilities on multiple fronts in the ongoing conflict.
| CHINA |
— China’s services sector growth hits 7-month high in December, but sentiment weakens. The Caixin China General Services PMI rose to 52.2 in December 2024, exceeding expectations of 51.7 and marking the fastest expansion since May. Growth was fueled by strong domestic demand, while export business contracted for the first time since August 2023. Employment declined due to resignations and cost concerns, and input price inflation accelerated slightly, prompting firms to increase selling prices. However, business sentiment weakened to its second-lowest level since March 2020, reflecting concerns over rising competition and a dim international trade outlook.
— Trump vs. China: Trade tensions reignite. President-elect Donald Trump plans to revive his hardline trade policies against China if re-elected, promising to raise tariffs on Chinese goods and accusing Beijing of unfair trade practices. This mirrors his approach during his first term, when he imposed a 25% levy on many Chinese imports.
Despite these threats, China’s adaptability may soften the impact, analysts note. Companies have previously sidestepped U.S. tariffs by relocating manufacturing to nations like Mexico, Vietnam, and Malaysia. Others, like e-commerce giant Temu, have localized operations in the U.S. to reduce their perceived Chinese ties. Such strategies have enabled Chinese firms to thrive, with Temu, for instance, becoming the top-downloaded app on Apple’s App Store in 2024.
— Rising threat: Chinese hackers as a military challenge. U.S. officials are increasingly alarmed by the evolving capabilities of Chinese hackers, now regarded as “soldiers on the front lines of potential geopolitical conflict,” according to the Wall Street Journal (link). Once dismissed as chaotic cyber intruders, these hackers have conducted sophisticated operations targeting U.S. infrastructure and telecom networks, raising concerns about their impact on future conflicts, particularly over Taiwan. Bloomberg reports (link) that Guam, a critical hub for Washington’s Pacific military strategy, has seen its power grid infiltrated — highlighting the heightened risks to U.S. response capabilities in the region.
| BORDER, IMMIGRATION, DEPORTATION & LABOR |
— Strained labor market: Ag sector faces H-2A costs and deportation concerns. As mass deportation policies loom under the incoming Trump administration, the U.S. agricultural sector is grappling with labor shortages and soaring costs tied to the H-2A visa program. Despite record usage of the program, farm employers criticize its expense and inefficiency, with rising wages outpacing non-farm sectors.
Deportation threats could exacerbate workforce challenges, increasing reliance on an already overburdened system.
Advocates and employers alike call for congressional reform to stabilize the volatile labor market and streamline the visa process, while worker groups warn of potential exploitation amid heightened enforcement efforts.
Background. The H-2A visa program, which allows U.S. employers to bring foreign workers for temporary agricultural work, has seen consistent growth in recent years. In fiscal year 2024, 384,900 H-2A positions were certified, an increase of over 6,000 from the previous year. This growth reflects the ongoing shortage of domestic farmworkers and the increasing importance of immigrant labor in agriculture.
The program faces several challenges:
- Rising costs: The expense of the H-2A program has become a significant concern for farm employers. Labor costs, including those associated with the H-2A program, are putting American farmers at a disadvantage in the global market.
- Administrative burdens: Farmers criticize the program for its inefficiency and administrative complexities.
- Wage increases: The adverse effect wage rate (AEWR), which is the minimum wage for H-2A workers, has been rising, outpacing wage increases in non-farm sectors.
— Homan defends Trump administration’s deportation plans on CBS’ Face the Nation. In a heated exchange on CBS News’ Face the Nation, President-elect Donald Trump’s newly appointed border czar, Tom Homan, defended the administration’s proposed deportation strategy against criticism from host Margaret Brennan. Brennan highlighted that the Biden administration’s deportations reached a decade-high of nearly 300,000 by the end of 2024, prompting questions about the Trump team’s promise to carry out the largest deportation operation in history.
Homan countered by accusing the Biden administration of inflating its deportation numbers, claiming that 80% stemmed from Border Patrol arrests near the southern border rather than interior enforcement efforts. “They’re playing a numbers game,” Homan said, dismissing comparisons between Trump and Biden-era deportation statistics due to differences in border crossing trends.
Pressed on how the incoming administration would manage mass deportations, Homan suggested that diplomatic strategies with countries like Venezuela would play a key role. “If they don’t take them back, they’re just gonna be deported to a different country,” he said, emphasizing the administration’s commitment to prioritizing public safety.
Brennan closed the interview, hinting at the challenges ahead, saying the country would “stay tuned for the details.”
| MEXICO |
— Sheinbaum addresses deportation policy, tariffs, and new energy appointment.
· Mexico open to receiving non-Mexican deportees, Sheinbaum suggests. During her Friday press conference, Mexican President Claudia Sheinbaum addressed the potential mass deportations pledged by President-elect Donald Trump. While reiterating Mexico’s opposition to such measures, Sheinbaum noted that Mexico could collaborate with the U.S. on mechanisms for handling non-Mexican deportees. This could include limiting acceptance to certain nationalities or requesting U.S. compensation for relocating deportees to their home countries. She highlighted existing agreements for direct deportation flights to migrants’ countries of origin and expressed a willingness to negotiate with the incoming U.S. administration.
· E-commerce tariffs aim to protect Mexican businesses. Sheinbaum also explained new tariffs and tax rules targeting bulk imports via e-commerce platforms. These measures, effective Jan. 1, are designed to curb the sale of untaxed goods from countries like China, which compete with Mexican small businesses. Sheinbaum emphasized that while individual imports are not the target, large-scale purchases for resale must comply with tax obligations.
· Former Veracruz governor joins energy agency. Former Veracruz Governor Cuitláhuac García was named director of the National Center for Natural Gas Control (Cenagas). Highlighting García’s engineering background and commitment to Mexico’s transformation, Sheinbaum expressed confidence in his ability to oversee the production, use, and distribution of natural gas.
| WEATHER |
— Drought threatens Southern California agriculture amid dry spell. Southern California’s prolonged dry spell — nearly eight months with negligible rain — is straining agriculture and raising concerns about wildfire risks. With rainfall levels significantly below average and no major storms forecast for January, the region is slipping into moderate drought conditions, according to the U.S. Drought Monitor.
The lack of rainfall is affecting soil moisture levels, leaving plants and crops vulnerable. Agricultural regions like the Central Valley, a critical hub for the state’s food production, remain in “abnormally dry” conditions. This threatens crop yields and increases reliance on irrigation from water reserves, which, while bolstered by two wet years, may not sustain prolonged dryness.
Statewide, the disparity in precipitation levels is stark. Northern California has benefited from above-average rainfall, but Southern California’s agricultural output, particularly high-water-demand crops like almonds and citrus, faces significant challenges. Experts emphasize the importance of continued snowpack accumulation in the Sierra Nevada, which serves as a vital water source for irrigation.
Officials remain cautiously optimistic that late-season storms in February or March could mitigate the dry start, but without substantial rainfall, Southern California’s agricultural sector could face a tough year ahead.
— NWS outlook: Moderate to heavy snow from the Ohio Valley to the Mid-Atlantic through late Monday night... ...Light rain/freezing rain over parts of the Ohio Valley to the Mid-Atlantic on Monday... ...There is a Marginal Risk (level 1/5) of severe thunderstorms over parts of the Southeast on Monday.
| KEY DATES IN JANUARY |
6: House certification of 2024 presidential election
8: First Social Security benefit checks of the year; cost of living adjustment is 2.5%
9: Day of Mourning for the late former President Jimmy Carter
10: Bureau of Labor Statistics December employment situation report
10: USDA Annual Summary, WASDE, Crop Production, Grain Stocks, Winter Wheat/Canola Seedings
15: BLS consumer price index report (inflation)
15: Quarterly estimated taxes due
15: Last day to enroll in a 2025 health plan via HealthCare.gov
20: Inauguration Day
20: College football national championship
24: USDA Food Price Outlook
26: AFC and NFC football championships
27: (tentative) First day IRS will begin accepting 2024 federal tax returns
28: Florida’s 1st and 6th special primaries
31: Employers and financial institutions should send out W-2 and 1099 tax forms
31: Federal Open Market Committee meets
31: USDA Cattle
| LINKS |
WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | RFS | IRA: Biofuels | IRA: Ag | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum |