Boris Johnson Resigns, But Remains U.K. PM Until Successor Named

Dem leaders make progress on another reconciliation package

Embattled U.K. Prime Minister Boris Johnson agrees to resign, his office said Thursday, ending an unprecedented political crisis over his future that has paralyzed Britain’s government. An official in Johnson’s Downing Street office confirmed the prime minister would announce his resignation later. Bookmaker William Hill puts former Chancellor of the Exchequer Rishi Sunak as the favorite at odds of 4-1. It is possible that Johnson will remain in office until October when the Conservative party meets for its annual conference. The string of high-level resignations offered a sign of how quickly Johnson lost support within his party despite surviving a no-confidence vote held just last month. The British pound jumped on the news and the U.K.’s FTSE 100 stock index jumped.

Ukrainian President Volodymyr Zelenskyy said Western heavy weapons are starting to have an effect on the battlefield but urged speedier deliveries. Russian forces, now effectively in control of Luhansk, are turning to parts of the Donetsk region still held by Ukraine.

Higher food and energy prices are expected to dominate a divisive G20 meeting this week, with U.S. officials looking to press Russia to allow a freer flow of grain from Ukraine via the Black Sea. Many nations, including China, have avoided criticizing Moscow, in part because of relationships in energy, grain and military supplies. Meanwhile, U.S. Secretary of State Antony Blinken is set to meet with counterparts from the world’s leading economies on the Indonesian island of Bali — while avoiding Russian Foreign Minister Sergei Lavrov, U.S. officials said.

The number of people affected by hunger globally rose to as many as 828 million in 2021, an increase of about 46 million since 2020 and 150 million since the outbreak of the Covid-19 pandemic, according to a United Nations report that provides fresh evidence that the world is moving further away from its goal of ending hunger, food insecurity and malnutrition in all its forms by 2030. More below.

Minutes from the Fed’s June meeting, released Wednesday, revealed that the central bank is prepared to use even more restrictive measures to tame surging inflation. They indicated that July’s meeting would bring another rate hike of up to 75 basis points and acknowledged that the economy could suffer a slowdown. With the potential for the firmer policy to slow growth, Fed officials also removed language from the June policy statement that “indicated an expectation that appropriate policy would result in a return of inflation to 2% and a strong labor market.” More perspective below.

Senate Majority Leader Chuck Schumer (D-N.Y.) is moving ahead with legislation aimed at lowering prescription-drug costs as talks continue with Sen. Joe Manchin (D-W.Va.) on a roughly $1 trillion broader plan that includes provisions on climate change and taxes. Details in Policy section.

“There is strong perception in some parts of the world, including in China, quite explicitly…that you do not have a bright future because the world is changing too fast for a system like the United States, a democracy with checks and balances.” — Singapore Prime Minister Lee Hsien Loong.

The heads of the FBI and Britain’s domestic security service issued sharply worded warnings to business leaders about the threats posed by Chinese espionage, especially spying aimed at stealing Western technology companies’ intellectual property.

Shares of fertilizer makers have been dragged down in recent weeks by falling crop prices.

Shell sees its refining profits nearly triple, adding $1 billion to its bottom line. In a trading update, the company forecast that the profit margin it earns by refining crude oil into products like gasoline and diesel rose in the second quarter to $28.04 a barrel, up from $10.23 a barrel in the January to March period.

With the Texas cotton crop in bad shape, producers are quite upset about the recent plunge in cotton futures. Details below.

Copper prices have fallen to their lowest level in nearly two years as concerns about an economic slowdown intensify.

Election Day 2022 is 124 days away. Election Day 2024 is 852 days away.

Equities today: Global stock markets were mostly up overnight. U.S. Dow opened around 200 points higher and were up nearly 300 points in follow-on trading. In Asia, Japan +1.5%. Hong Kong +0.3%. China +0.3%. India +0.8%. In Europe, at midday, London +1.2%. Paris +1.5%. Frankfurt +1.6%.

U.S. equities yesterday: The Dow finished with a gain of 69.86 points, 0.23%, at 31,037.68. The Nasdaq was up 39.61 points, 0.35%, at 11,361.85. The S&P 500 rose 13.69 points, 0.36%, at 3,845.08.

Agriculture markets yesterday:

• Corn: December corn futures rose 6 1/2 cents to $5.85, after earlier dropping to a five-month low of $5.66 1/2.
• Soy complex: November soybeans rose 6 3/4 cents to $13.22 3/4, after earlier falling to $13.02 1/2, the contract’s lowest intraday price since $13.00 3/4 on Jan. 25. August soyoil fell 106 points to 58.56 cents. August soymeal rose $5.20 to $415.60.
• Wheat: September SRW wheat fell 2 1/2 cents to $8.04 1/2, the contract’s lowest closing price since Feb. 18. September HRW wheat fell 10 1/2 cents to $8.51 1/2, a 4 1/2-month closing low. September spring wheat fell 3 3/4 cents to $8.86 1/4.
• Cotton: December cotton fell 487 points to 88.61 cents, a seven-month low.
  Cattle: August live cattle rose $1.575 to $134.50. August feeder cattle rose 60 cents to $173.30. Choice beef rose $3.58 early Wednesday to $268.24.
• Hogs: August lean hog futures surged $3.25 to $109.20, a two-week closing high. Futures’ gains this week suggest traders anticipate the cash market will strengthen over the short-term.
  

Ag markets today: Corn, soybean and wheat futures traded sharply higher overnight as markets rebounded from recent hefty losses. As of 7:30 a.m. ET, corn futures were trading 10 to 12 cents higher, soybeans were 30 to 37 cents higher and wheat futures were 27 to 32 cents higher. Front-month U.S. crude oil futures are around 85 cents higher, and the U.S. dollar index is down around 200 points.

Technical viewpoints from Jim Wyckoff:

On tap today:

• U.S. jobless claims, due at 8:30 a.m. ET, are expected to fall to 230,000 in the week ended July 2 from 231,000 one week earlier. UPDATE: Initial jobless claims, a proxy for layoffs, rose to a seasonally adjusted 235,000 last week from 231,000 the week before, the Labor Department said. The figure stands just above the 2019 prepandemic weekly average of 218,000, when the labor market was also strong. The four-week moving average for claims, which smooths weekly volatility, inched up to 232,500 last week, an increase of 750 from the previous week’s average. Continuing claims, a proxy for the total number of people receiving payments from state unemployment programs, rose to 1.4 million in the week ended June 25 from a revised 1.3 million in the previous week. Continuing claims are reported with a one-week lag.
• U.S. trade deficit, due at 8:30 a.m., is expected to narrow to $84.7 billion in May from $87.08 billion one month earlier. UPDATE: The U.S. trade deficit narrowed for the second straight month in May, as a decrease in goods spending by American households held down import growth while exports of energy products increased. The trade gap in goods and services shrank 1.3% in May from the previous month to $85.5 billion, the Commerce Department said Thursday, down from April’s revised $86.7 billion. Imports rose 0.6% to $341.4 billion, driven by a rise in crude oil imports. Exports rose 1.2% to $255.9 billion due to increased exports of crude oil and natural gas. Imports of consumer goods fell $1.5 billion as a result of Americans’ cooling appetite for goods purchases.
• Federal Reserve speakers: St. Louis’s James Bullard on the economy and monetary policy at 1 p.m. ET and gov. Christopher Waller on the economy and monetary policy at 1 p.m. ET.
• Note: USDA’s Weekly Export Sales report is pushed back to Friday morning. due to Monday’s holiday.

Minutes from the Fed’s June meeting, released Wednesday, made it clear that officials are eager to move rates up to a point where they are weighing on growth as policymakers ramp up their battle against inflation. The central bank will announce its next rate decision on July 27, and several key data points are set for release between now and then, including the latest jobs numbers for June and updated Consumer Price Index inflation figures. The Fed chair, Jerome Powell, has said that central bankers will debate between a 0.5- or 0.75-percentage-point increase at the coming gathering, but officials have begun to line up behind the more rapid pace of action if recent economic trends hold. The policymakers acknowledged that more rate hikes could weaken the economy. The Fed’s minutes offered no major surprises for Wall Street, said Tom Martin, senior portfolio manager with Globalt Investments. “What’s going to be much more interesting is what the Fed says in July,” Martin said.

Bottom line: The marketplace sees a 97.55% chance the Federal Reserve will raise its key Fed funds rate by 75 basis points at its next FOMC meeting. That is up from 84% a day ago.

Shares of fertilizer makers have been dragged down in recent weeks by declining prices for corn, wheat and other crops. Though fertilizer stocks remain above where they traded before the pandemic, they have since spring shed much of their 2022 gains.

High mortgage rates are pushing some home buyers to choose adjustable-rate mortgages over fixed-rate loans, to keep monthly costs down. According to the Mortgage Bankers Association, 9.5% of mortgage applications submitted the week ending July 1 were for adjustable-rate mortgages, up from around 3% in early January.

Market perspectives:

• Outside markets: The U.S. dollar index is weaker after hitting a 20-year high Wednesday. The yield on the 10-year U.S. Treasury note is fetching 2.954%. The 2-year/10-year note yield curve is presently inverted, which is one clue of impending U.S. recession. Treasuries extended declines with 10-year yields rising to 2.98% as an unwind of haven demand saw the broader bond market under pressure. Short-dated German bonds underperform peers, with 2-year yields rising over 12 basis points. Base metals rallied in the risk-on environment with LME copper and nickel rising over 3%. Gold and silver futures are higher, with gold trading around $1,742 per troy ounce and silver around $19.33 per troy ounce. Crude futures and spot gold held a narrow range. Bitcoin traded near $20,500.

• The euro has slumped, but it could fall another 10%, Societe Generale said Wednesday. The weight of Europe’s energy crisis and the European Central Bank’s bond-rout response are pulling down the common currency. That all makes the euro “unbuyable” right now, as the shared currency dropped another 1% yesterday, moving below $1.02 for the first time since November 2002. Compared to the dollar, traders remain wary of the euro because the European Central Bank hasn’t raised interest rates as aggressively as the Federal Reserve — which has contributed to a strengthening dollar.

• U.S. crude is trading around $99.70 per barrel and Brent around $101.80 per barrel.

• An industrial metal is flashing recession warnings signs: Copper has fallen to its lowest level since late 2020 as many investors unwind bets. The most actively traded copper futures contract finished Wednesday at $3.408 a pound, its lowest settlement since November 2020. That has copper, used in everything from construction to electronics, on pace to decline for five consecutive weeks. Copper hit record highs earlier this year partly because of supply concern related to the war in Ukraine and sanctions on Russia, a metals producer. Copper has since retreated by about 30%.

• Big business calls on Biden to avert rail strike. The U.S. Chamber of Commerce is calling on President Joe Biden to help resolve a dispute between the country’s Class 1 railroads and 12 rail unions to avert a possible rail strike beginning July 18. In a letter sent to the White House on Wednesday, U.S. Chamber President Suzanne Clark warned that the decision last month by the National Mediation Board (NMB) to release the railroads and unions from mediation and begin a 30-day cooling off period “presents a new challenge to the U.S. business community, which is already navigating a difficult environment.” Unless the administration acts, either party is free to exercise “self-help” options — including a strike beginning at 12:01 a.m. on July 18, when the 30-day cooling-off period ends. “I urge you to help resolve the ongoing labor negotiations … by following historic precedent and appointing a Presidential Emergency Board (PEB) comprised of individuals who are impartial, belong to the National Academy of Arbitrators, and have direct experience in resolving rail disputes,” Clark wrote. “It is imperative that the Administration act to prevent any disruption to America’s rail service.” The letter was copied to Secretary of Labor Marty Walsh and Secretary of Transportation Pete Buttigieg.

• Wheat market outlook: Commodity trader and analyst Richard Crow says a U.S. Crop Production report next Tuesday is expected to show a slightly larger crop. Elsewhere, he says “Argentina’s crop will be lowered, the EU crop is likely to be reduced, and Russia’s crop will increase as well as Canada’s. The world has had large business, which the EU has done for the most part.”

• Is cotton a recession barometer? Each day last week, cotton futures encountered triple-digit losses; the December futures contract closed below $1 for the first time since January. Yesterday, December cotton fell 487 points to 88.61 cents, a seven-month low. Cotton has now shed more than a third of its price since early May. That’s bad news for U.S. economic growth as the U.S. is the largest exporter of cotton worldwide. Over the last two years, cotton futures contracts shot up to record highs, from 48.35 cents per pound in April 2020 to nearly $1.60 per pound in April 2022. A large reason for the huge rally was an increase in market speculation. Managed funds significantly reduced their net long position last week, according to the Commodity Futures Trading Commission. Now, there’s a growing movement among some cotton producers to change the way ICE futures function to prevent the speculation. (It’s the age-old game of blaming speculators when the price goes down... even though they appeared to help prices go up. Just saying….)

• Ag trade: Japan purchased 122,420 MT of wheat from its weekly tender, including 66,370 MT U.S. and 56,050 MT Canadian. Egypt purchased 63,000 MT of German wheat. The Philippines tendered to buy at least 50,000 MT of optional origin feed wheat.

• NWS weather: Widespread showers and thunderstorms with excessive rainfall and severe weather possible through Friday from the High Plains to the East Coast... ...Dangerous heat and humidity to continue from parts of the Central/Southern Plains to the Mid-Atlantic and Southeast.

Items in Pro Farmer’s First Thing Today include:

• Bargain buying overnight
• India tightens wheat flour export regulations
• Indonesia may cut palm export tax to spur shipments
• Ukraine wants Turkey to explain letting Russian grain ship sail (details below)
• Slow cash cattle negotiations
• Cash hog index continues to slide

— Summary: Russian forces are inching closer to the eastern Ukrainian territories and are likely to mount an offensive on the key city of Sloviansk, a regional military official said, urging civilians to evacuate.

• Ukrainian President Volodymyr Zelensky said the Western artillery his country has received has “started working very powerfully.” In his nightly address Wednesday, Zelensky confirmed his military was able to strike “depots and other spots that are important for the logistics of the occupiers,” and the efforts are “significantly reducing” the offensive potential of the Russian army.
• China’s top chip maker SMIC says it has never had any Russian clients, allaying concerns over potential new U.S. sanctions — Shanghai-based Semiconductor Manufacturing International Corp says it has always been operating in compliance with existing trade restrictions.
  

— Market impacts:

• War in Ukraine has seen power prices in Europe soar to record highs this week as the effects of Russia’s gas supply cuts ripple through the continent. German power, the European benchmark, rose to a record of €337/MWh ($343.25), while French prices neared an all-time high of €398, triggering real fears for manufacturing and heavy industry. The U.S. is also discussing price caps on Russian oil and gas with its allies, but the concept would need to garner widespread adoption to be effective, while Vladimir Putin could cut supplies even further if he felt that Moscow was being threatened.

• Ukraine wants Turkey to explain letting Russian grain ship sail. Ukraine will summon Turkey’s ambassador to seek clarification after a Russian-flagged cargo ship suspected of carrying stolen Ukrainian grain left a Turkish port, Ukraine’s foreign ministry said. It was “unacceptable” for the ship to have been allowed to leave, the ministry said. “We regret that Russia’s ship Zhibek Zholy, which was full of stolen Ukrainian grain, was allowed to leave Karasu port, despite criminal evidence presented to the Turkish authorities,” foreign ministry spokesperson Oleg Nikolenko wrote on Twitter.

  Bottom line: Recall how many reports the past month or so have dealt with “talks” or a “plan” to allow Ukrainian farm products to be exported, only to see very little if any progress on the matter.

— Top Senate Democrats on Wednesday released an updated plan aimed at lowering the cost of prescription drugs, signaling progress on a crucial piece of their bid to salvage some of President Biden’s stalled social safety net, climate and tax bill.

It would be paid for in part by the prescription drug proposal that is projected to save the government tens of billions of dollars in the coming years and rolling back some 2017 GOP tax cuts. Centrist Sen. Joe Manchin (D-W.Va.) wants to put half of that $1 trillion into deficit reduction. That would leave around $500 billion for public and social spending. If around $300 billion of that went to funding the transition to clean energy, through tax incentives and other means, that would leave around $200 billion for expanded Affordable Care Act/ObamaCare subsidies.

Under the new measure, Medicare would for the first time be allowed to directly regulate prescription drug prices. It would cap the out-of-pocket amount that Medicare patients can be asked to pay for prescription drugs at $2,000 a year, limit the amount drug companies can increase prices each year, and make more vaccines free for those patients, according to a draft put forward on Wednesday. (Some seniors taking expensive medicines for cancer and autoimmune conditions regularly spend $15,000 or more a year on medicines.)

The bill has been given to the Senate parliamentarian to ensure that it meets the requirements of reconciliation to allow circumvention of the filibuster so it can pass with a simple majority. Because Democrats plan to use the fast-track budget process known as reconciliation, the measure must adhere to the strict limits enforced by the Senate’s top rules official.

Manchin has repeatedly said any package must be focused on reducing the national debt, tackling the costs of prescription drugs and undoing pieces of the tax law Republicans muscled through in 2017. And while he opposed key pieces of his party’s ambitious plans to address climate change, Manchin has signaled openness to including a climate and clean energy tax package in his talks with Schumer.

“Senator Manchin has long advocated for proposals that would lower prescription drug costs for seniors, and his support for this proposal has never been in question,” said Sam Runyon, a spokeswoman. “He’s glad that all 50 Democrats agree.”

What’s ahead. Democrats are pushing to include an extension of Affordable Care Act subsidies that were expanded under the $1.9 trillion pandemic relief law enacted last year. Those are set to expire at the end of the year. For them to expire now would mean millions of people see premium hikes, and a few million more could lose coverage entirely. That could spell trouble for American families as well as care providers such as hospitals just as the economy slows down.

Energy language: The Supreme Court’s decision to limit the Environmental Protection Agency’s ability to address carbon emissions last week also heightened a push among Democrats to pass legislation that would counter the impact of climate change. The proposal under discussion could include as much as $300 billion in clean-energy tax incentives that the House initially approved in November.

If the Democrats succeed in clearing another reconciliation measure, Senate Minority Leader Mitch McConnell (R-Ky.) threatened that Republicans would walk away from the China-influenced manufacturing and technology bill, which has bipartisan support, if Democrats insisted on salvaging the climate spending and tax package.

— Prime Minister Boris Johnson agrees to step down. Scandal-scarred British Prime Minister Boris Johnson will resign today, his spokesperson confirmed. “The Prime Minister will make a statement to the country today,” a spokesperson said. Johnson, who took office in 2019, will remain as prime minister until a successor is appointed, which could be until fall if his party lets him. It was not immediately clear Thursday who will replace him as prime minister (link to NYT article on some possibilities). More than 50 ministers have quit the government in less than 48 hours, with seven of them handing in their resignation letters Thursday morning, saying Johnson is not fit to be in charge after a string of scandals.

— Kate Bedingfield, the White House communications director and one of the president’s longtime advisers, announced she will leave the administration soon. Top White House officials praised her work, and people close to her said she wanted to spend more time with her children after working for President Biden for more than seven years. Besides serving in the White House, Bedingfield worked as the deputy campaign manager for communications on Biden’s 2020 campaign and as his communications director when he served as the vice president.

— FAA nominee. President Biden plans to nominate Denver airport chief Phil Washington to lead the Federal Aviation Administration.

— Authorities in Beijing are considering another play to shore up the world’s second-largest economy by allowing local governments to sell 1.5 trillion yuan ($220 billion) of bonds in the second half of this year. Proceeds from the sales, which were originally scheduled to begin after Jan. 1, 2023, would most likely be used to fund infrastructure projects. The move comes as China’s economy continues to struggle to recover from the pandemic.

— China unveils plans to spur car demand, may extend EV tax break. China on Thursday announced a raft of new steps to spur consumer demand for cars, saying it would consider extending a tax break for electric vehicles and outlining plans to build more charging stations and encourage lower charging fees. As part of the new efforts, authorities last month halved the auto purchase tax to 5% for cars priced under 300,000 yuan ($45,000) with 2.0-litre or smaller engines. Buyers of certain fully electric and partly electric vehicles have not had to pay the purchase tax since 2014. A plan to reinstate it next year may now be scrapped, the commerce ministry said. Beijing will also encourage the replacement of older vehicles, increase credit support for car purchases and remove barriers to selling second-hand cars across different provinces. The commerce ministry statement did not make a mention of any extension of subsidies for what China calls new energy vehicles – a program that has been credited with supercharging the sector’s growth.

The halving of the tax has helped the market rebound with June passenger car sales jumping 22% from a year earlier to 1.9 million units, according to preliminary data from an auto association. EV sales soared 130% to 546,000 units last month, accounting for nearly 30% of total vehicle sales.

— China isn’t interested in ramping up fuel exports amid the ongoing global energy crunch. Beijing called for 40% lower quotas for state and private refiners compared to last year, according to a Bloomberg report (link).

— China’s trade faces uncertainties. China expects June trade growth to remain relatively high, but said the second half year brings rising uncertainties, the commerce ministry said. According to a survey, China’s foreign trade growth faces instabilities in the second half of this year and the trade situation remains complex, a commerce ministry spokesperson said, without providing specifics. The ministry said Beijing and the U.S., who agreed to maintain close communications, will strengthen the exchange of macroeconomic policies and promote pragmatic cooperation on the economy and trade.

— Australia, China foreign ministers to meet at G20 to reset ties. The foreign ministers of Australia and China will meet for the first time in almost three years as the two nations try to reset a relationship that has often been marked by diplomatic tensions and economic tariffs.

— Shanghai back on Covid alert amid new outbreaks. Millions of people in Shanghai braced for a third day of mass Covid-19 testing as authorities there and other Chinese cities scrambled to stamp out new outbreaks. Unless local officials succeed in preventing the virus from spreading, they could be compelled to invoke strict restrictions on residents’ movement, under China’s “dynamic zero Covid” strategy. Having just emerged from a two-month lockdown, Shanghai was again on high alert as it raced to isolate infections linked to karaoke services that had been taking place illegally. The resurgence in Covid cases and potential lockdowns rekindled worries about growth in the world’s second-largest economy.

— China is closing in on the finish line on developing its own Covid antiviral pill. And it has what looks to be a promising candidate, according to a Quartz article (link).

— Heads of the FBI and Britain’s MI5 warned business leaders about the threats posed by Chinese espionage, especially efforts to steal technology companies’ intellectual property. Separately, U.S. counterintelligence officials warned state and local government leaders and business executives about a different Chinese threat: overt and covert attempts to influence policymaking. They cited tactics including open lobbying, collecting personal information about state and local leaders and leveraging trade and investment to reward or punish officials.

— China offers women perks for having babies, if they’re married. Beijing is giving incentives to stem a demographic crisis, but its control over childbirth and its suppression of women’s rights are making it difficult for some aspiring parents to start a family. Link for details.

— U.S. aims to expand export bans on China over security and human rights. The Biden administration is applying lessons learned from controls on Russia during the Ukraine war to try to limit China’s military and technological advances.

— Chinese pork stocks including WH Group recede as nation’s top planning body cracks down on misconduct, ‘vile speculation’ stoking hog prices. Trading in pork stocks started to unravel after the National Development and Reform Commission said it would crack down on misconduct and ‘vile speculation’ it blames for stoking runaway hog prices. Link for more.

— Syngenta sows food self-sufficiency for China with IPO via a $10 billion offering to fund acquisitions and R&D with focus on seeds. Link for more info.

— Treasury examines climate effect on insurance availability. “The Treasury Department is growing increasingly concerned that climate change is making property insurance scarce in disaster-prone areas and is looking at launching the first nationwide assessment of insurers’ financial exposure to climate risk. The Federal Insurance Office sent a preliminary email Thursday to insurance regulators in all 50 states asking what data they have that would show insurance coverage, liabilities and losses for each ZIP code in their state over the past five years,” E&E News’ Thomas Frank reports.

— Blackstone invested $400 million in environmental commodity exchange Xpansiv. The platform lets companies trade offsets and oil contracts that account for fossil fuels’ carbon footprint, to meet green goals.

— France plans to nationalize power company EDF, saying the change is needed to manage the transition away from fossil fuels.

— IEA warns on China’s dominance of solar panel supply chain. Concentration of key manufacturing stages could threaten global shift to cleaner energy, the International Energy Agency report cautions. The report, the first of its kind by the agency, found that China’s share in the manufacturing stages for solar, from the production of polysilicon to the panels themselves, exceeds 80%, and in some stages could reach as high as 95% by 2025. “The world will almost completely rely on China for the supply of key building blocks for solar panel production through 2025,” the agency said in the report. “This level of concentration in any global supply chain would represent a considerable vulnerability.” The report found that high commodity prices and existing bottlenecks in the supply chain had already led to a rise of 20% in panel prices over the past year, which has resulted in delays in their delivery across the world.

— Shell has big plans in the Gulf of Mexico, despite mixed signals from the Biden administration on the future of drilling there, the Wall Street Journal reports (link). Shell is near completion on its 13th major offshore project in the region, costing about $3 billion, and will need to invest billions more in years to come just to maintain current Gulf production levels. President Biden campaigned on a pledge to stop new oil drilling on federal territory, and while he has offered a five-year plan for a maximum of 10 sales in the Gulf — assailed by environmental groups — administration officials said they could still move to block all new offshore-drilling lease sales.

Shell said higher fuel-refining margins could add more than $1 billion to second-quarter earnings, set to be posted July 28.

— FDA is devising plans to let overseas baby-formula makers keep selling in the U.S. after the shortage ends, the Wall Street Journal reports (link). The program, which began in May when domestic supplies ran low, has resulted in shipments from nine countries of enough formula to fill 400 million 8-ounce bottles.

— World hunger rate rises quickly as global economy stumbles. Nearly one in 10 people worldwide suffer from hunger, an increase of 150 million since the pandemic struck in 2020, and the numbers are expected to worsen, said the annual U.N. hunger report (link) on Wednesday. “The global price spikes that we are seeing as a result of the crisis in Ukraine threaten to push countries around the world into famine,” said the leader of the World Food Program.

— Covid violations. Food production companies, from growers to processors, were four times more likely to be cited for violating Covid-19 safeguards than other California industries, said an analysis of state worker safety records. Link for details.

— The Dallas Cowboys face backlash after announcing a partnership with a gun-themed coffee company. The team announced the marketing agreement with Black Rifle Coffee the day after a deadly shooting at a Fourth of July parade in Highland Park, Ill. On social media, people criticized the team for the timing of the announcement.

— Summary:

• Global Covid-19 cases at 552,525,905 with 6,344,824 deaths.
• U.S. case count is at 88,263,520 with 1,019,083 deaths.
• Johns Hopkins University Coronavirus Resource Center says there have been 592,269,252 doses administered, 221,924,152 have been fully vaccinated, or 67.35% of the U.S. population.

— Pharmacists can prescribe the leading Covid-19 pill directly to patients under a new U.S. policy announced Wednesday that’s intended to expand use of Pfizer’s drug Paxlovid. The Food and Drug Administration said pharmacists can begin screening patients to see if they are eligible for Paxlovid and then prescribe the medication, which has been shown to curb the worst effects of Covid-19. Previously, only physicians could prescribe the antiviral drug.

— Vaccine dose demand sags. Governments, drugmakers and vaccination sites are discarding tens of millions of unused and expiring Covid-19 vaccine doses as demand sags.

— Dem candidates a no-show when Biden visits Ohio. When President Biden visited Ohio Wednesday, the top Democrats seeking statewide office in November both had other places to be. Democratic Senate hopeful Tim Ryan and gubernatorial aspirant Nan Whaley’s decisions to steer clear of the president in a state Biden lost by more than 8 percentage points in 2020.

— Trump-era White House counsel Pat Cipollone has reached a deal with the House January 6 committee and agreed to be interviewed behind closed doors on Friday. Cipollone’s testimony will be videotaped, so clips are expected at upcoming hearings. Other witnesses have testified that Cipollone spoke out internally against former President Trump’s efforts to stay in office after the 2020 election and warned of the potential criminality of his actions.

— The Biden administration put the finishing touches on a roughly $90 billion bailout of multiemployer pension plans that includes truck drivers and other workers. Link for details.

— The Transportation Department is awarding nearly $1 billion to expand airport terminals across the country as the Biden administration and air carriers have been plagued by recent flight disruptions. The Federal Aviation Administration said 85 U.S. airports will receive millions of dollars each from the infrastructure law to upgrade their terminals by expanding capacity, as well as making them more accessible and sustainable. Airports in Los Angeles, Denver, Dallas-Fort Worth, and Washington’s Dulles International Airport are among those set to receive money for projects.

— Two top former FBI officials, both of whom Donald Trump wanted prosecuted, have faced tax audits. Link to NYT article for details.