China Gloom Accelerates as Lending Sector Issues Mount

Fertilizer prices continue falling | Russian drone strikes damaged grain silos and warehouses at Ukrainian river port

JPMorgan Chase lowered its 2023 economic growth forecast for China to 4.8%, down from the 6.4% call in May, after the slew of disappointing data this week. Barclays cut its gross domestic product (GDP) growth estimate for this year to 4.5% from 4.9%, also citing weak data and lack of supportive measures, according to Bloomberg. China is aiming for GDP growth of around 5% in 2023, but China’s economy showed no bright spots in July, with retail sales, industrial output and investment all posting weaker than expected growth as property investment fell.

Just a year ago, Beijing and Moscow were promoting a new global order, but both economies are now facing significant challenges. China is experiencing declines in exports, manufacturing activity, and property prices. Additionally, the country has stopped reporting its rising youth unemployment rate. A worsening debt crisis and the threat of deflation are putting economic growth at risk. Meanwhile, Russia, which is under sanctions, is grappling with a collapse in commodity-based export revenues. Extensive military spending has further strained its economy. The Russian ruble has recently fallen below the critical level of 100 against the U.S. dollar, tumbling 37% year-to-date. Upshot: This marks a swift unraveling for the economies of China and Russia, as the once-promising economic prospects have given way to various challenges and vulnerabilities. Details of the unfolding events below.

The yield differential between the China and U.S. benchmark 10-year government bonds widened to the highest since February 2007 on Wednesday, as investors speculated China’s central bank would ease monetary policy further after a surprise rate cut on Tuesday, even if it puts the yuan under pressure. More in China section. (Of note: The inflation-adjusted real yield on 10-year U.S. Treasury notes hit a 14-year high this week as investors dumped the long-rated bonds en masse. More in Markets section.)

China called for more measures to protect its crops after warning recent floods in its northeast grain belt could worsen diseases and infestations.

Chinese pork processing giant WH Group Ltd expects hog prices in China to rise 10% to 20% in the second half of 2023 from the first six months, supported by stronger demand and smaller supply glut.

Russian drone strikes damaged grain silos and warehouses at the Ukrainian river port of Reni on the Danube. Meanwhile, the U.S. is engaged in discussions with Turkey, Ukraine and neighboring countries to develop alternative export routes for Ukrainian grain, the Wall Street Journal reports. Details in Russia & Ukraine section.

Indonesia launches WTO dispute over EU duties on biodiesel imports. More in Energy section.

It’s the one-year anniversary of the Inflation Reduction Act (IRA), which many call the Climate Bill. The Biden administration, including USDA, is out with several press releases and facts sheets regarding how the bill is being implemented. President Biden will deliver remarks at 2:30 p.m. ET on the one-year anniversary of the IRA. How much will be spent because of the IRA? Cost estimates have continued to shift upward and now span a range of more than half a trillion dollars. Meanwhile, U.S. tax officials have yet to define what projects will qualify for the green hydrogen tax credit. At stake is potentially as much as $120 billion, according to Adithya Bhashyam of BloombergNEF. It’s another uncapped incentive, though, so the cost will depend on how much qualifying green hydrogen gets produced.

Fertilizer prices continue decline and may impact farmers’ nitrogen decisions, says a FarmDoc report.

The Biden Administration is shifting the approach to regulatory analysis, potentially making it easier to implement new rules while obfuscating their costs, the Wall Street Journal said in an editorial. Details below.

EPA denied two petitions from environmental groups which sought to tighten water quality and pollution regulations for large farms. More info in Livestock section.

Streaming’s share of U.S. viewing time grew to a new high in July, while television viewing fell below 50% for the first time, according to new Nielsen data.

Hawaii: The death toll of 106 is expected to grow after last week’s devastating fire. President Biden said he plans to travel to the state at some point but doesn’t want to complicate recovery efforts.

North Korea publicly acknowledged that U.S. Army Pvt. Travis King crossed into its territory, marking the first time it has been confirmed by North Korean authorities.

Equities today: Asian and European stock markets were mixed to weaker in overnight trading. U.S. stock indexes are pointed to mixed openings. Hong Kong stocks tumbled to a 10-week low after JPMorgan and Barclays cut their China growth forecasts amid deepening economic woes and lack of effective stimulus. In Asia, Japan -1.4%. Hong Kong -1.4%. China -0.8%. India +0.2%. In Europe, at midday, London -0.4%. Paris flat. Frankfurt +0.1%.

U.S. equities yesterday: The Dow ended down 361.24 points, 1.02%, at 34,946.39. The Nasdaq fell 157.28 points, 1.14%, 13,631.05. The S&P 500 declined 51.86 points, 1.16%, at 4,437.86.

Target beat analysts’ expectations for second-quarter earnings, sending shares higher in early trading. Earnings per share came in at $1.80, compared with expectations for $1.43. Shares were up more than 8% in premarket trading. However, weak sales prompted the company to lower guidance for the rest of the year. It now sees full-year EPS between $7 and $8, compared with an earlier estimate of $7.75 to $8.75. CEO Brian Cornell warned that the second half of the year could be tough as student loan payments resume this fall and the prices of everyday items remain elevated.

Agriculture markets yesterday:

• Corn: December corn futures dropped 12 1/2 cents to $4.75 1/2, nearer the session low and hit an 11-month low.
• Soy complex: November soybeans fell 20 3/4 cents to $13.05 1/4, near the session low, while September meal fell $11.50 to $403.80, the lowest close since July 12. September soyoil rose 81 points to 63.33 cents.
• Wheat: December SRW wheat fell 17 3/4 cents to $6.23 3/4, nearer the session low and hit a 2.5-month low. December HRW wheat dropped 13 3/4 cents to $7.45 1/2, nearer the session low and hit a 3.5-month low. December spring wheat fell 18 cents to $8.02, the lowest close since June 7.
• Cotton: December cotton fell 137 points to 85.10 cents, ending the session below the 10- and 20-day moving averages for the first time since July 10.
• Cattle: October live cattle traded in a narrow session but ultimately fell 70 cents to settle at $179.975, near the intraday low. October feeder futures fell 30 cents to $251.55, though they traded in a choppy session on both sides of unchanged.
• Hogs: Hog futures remained under downward pressure Tuesday, with the nearby October falling 95 cents to $78.20. Traders clearly expect substantial hog and pork losses in the coming weeks and months, with nearby October futures falling well below $79.00, whereas the August contract is likely to cash settle just under $102.00 today.
  

Ag markets today: Corn, soybeans and wheat regained a portion of Tuesday’s losses during overnight trade. As of 7:30 a.m. ET, corn futures were trading mostly 2 cents higher, soybeans were 7 to 8 cents higher, SRW wheat was 8 to 9 cents higher, HRW wheat was 1 to 3 cents higher and HRS wheat was 4 to 7 cents higher. Front-month crude oil futures were anchored near unchanged, while the U.S. dollar index was nearly 100 points lower.

Market quotes of note:

• U.S. interest rates. Says the Sevens Report: “It’s not how high rates go anymore; it’s how long they stay there.” As the Federal Reserve prepares to release the minutes of its July meeting later today, economic data since that meeting have shifted the debate from how high interest rates will ultimately climb to how long they must stay high to reach the Fed’s inflation-taming goals.

  Neel Kashkari, president of the Minneapolis Fed and a voting member of the rates committee, is a hawk. He said yesterday that he was seeing “positive signs” that inflation was easing, but warned: “I’m not ready to say that we’re done.”
  

• Focus on regional banks. Minneapolis Federal Reserve President Neel Kashkari, recognized for his role in devising the bailout program for banks during the 2008 financial crisis, is advocating for a more stringent approach towards regional banks. Kashkari suggested that the crisis that commenced in March and resulted in the downfall of numerous regional banks, including Silicon Valley Bank, might still persist. He warned that if the Federal Reserve continues to increase interest rates, it could exacerbate challenges for similar institutions. Following his speech, bank stocks experienced a decline. Kashkari’s remarks underscore the potential fragility of regional banks and their vulnerability to adverse economic conditions, highlighting the importance of regulatory measures to safeguard their stability.
  
• What will U.S. consumers do? “There’s uncertainty with respect to where the consumer goes in the second half.” — Home Depot finance chief Richard McPhail.
  

U.K. inflation rate falls to 29-month low. The inflation rate in the U.K. dropped to 6.8% in July 2023, the lowest since February 2022, from 7.9% in June, and matching market consensus, as energy costs eased further. Meantime, the core rate stayed at 6.9%. On a monthly basis, consumer prices fell by 0.4%, the first decline since January.

Is it time to worry about consumer debt? One of the biggest debates in the market today is over what exactly is going to happen with consumer credit. Delinquencies on various kinds of debt are rising, but the rate at which people are falling into outright distress remains low. How long can that continue? A Wall Street Journal article (link) dissects a complex and evolving picture, and looks at where the stress appears to be most acute: borrowers with poor credit records.

Recession predictions remain present despite recent developments. Bank of America’s recent survey of global fund managers, released recently, was titled “the least bearish” since February 2022, just before the Federal Reserve’s efforts to raise interest rates. However, the survey also indicated that only 40% of the surveyed fund managers regarded a recession as “unlikely.” This suggests that while sentiment might be somewhat less pessimistic compared to earlier periods, a significant portion of fund managers still harbor concerns about the possibility of an economic downturn.

Market perspectives:

• Outside markets: The U.S. dollar index was weaker, with most foreign rival currencies higher against the greenback. The yield on the 10-year U.S. Treasury note eased to trade around 4.19%, with a mixed to mostly lower tone in global government bond yields. Crude oil prices shifted higher ahead of US gov’t inventory data due later this morning, with U.S. crude around $81.30 per barrel and Brent around $85.20 per barrel. Gold and silver were narrowly mixed, with gold weaker around $1,934 per troy ounce and silver firmer around $22.71 per troy ounce.

• The inflation-adjusted real yield on 10-year Treasury notes hit a 14-year high this week as investors dumped the long-rated bonds en masse. (Bond yields rise when the price falls.) Rising yields tend to push up borrowing costs for companies and home buyers, creating a drag on economic growth. U.S. home builder confidence fell this month for the first time this year.

• Bidding war for U.S. Steel heats up. Hopes of a bidding war have added nearly $2 billion in market value this week to U.S. Steel, the much-diminished manufacturing behemoth that was bankrolled by John Pierpont Morgan and Charles Schwab at the turn of the last century.

• Fertilizer prices continue decline and may impact farmers’ nitrogen decisions. Link to a FarmDoc article for details.

• 4.0: Average days’ dwell time for rail transport for import containers at the ports of Los Angeles and Long Beach in June, down from 5.2 days in May and the lowest level since January 2022, according to the Pacific Merchant Shipping Association.

• Severe summer heat across various regions globally is impacting energy trade dynamics, the Wall Street Journal reports (link). Energy-rich countries in the Middle East and North Africa are grappling with challenges in maintaining power supply for their populations while scaling back energy exports. Egypt, for instance, is dealing with rolling blackouts, leading to concerns about its domestic gas reserves running low. Iran and Iraq, major oil exporters, are also facing blackouts due to extremely high temperatures, with Baghdad experiencing temperatures as high as 122 degrees Fahrenheit. Although Egypt denies gas shortages, its gas exports dropped to zero in June and only slightly rebounded in July, according to commodities data firm Kpler. Experts attribute these energy challenges to a combination of factors including soaring summer temperatures, insufficient maintenance of power stations, increased demand due to population growth, and declining output from Egypt’s largest gas field.

• Federal authorities are adjusting water restrictions on the Colorado River for the upcoming year following a substantial winter season that has helped stabilize water levels during critical shortages. The U.S. Bureau of Reclamation announced on Tuesday that Lake Mead and the Lower Colorado River will operate under Tier 1 water shortage conditions in 2024. This decision will ease water restrictions in Arizona, Nevada, and Mexico, allowing these states to retain billions of gallons of Colorado River water and build up their water reserves instead of relying heavily on other regions. This change in policy follows last year’s winter season, which brought a series of atmospheric rivers to drought-affected areas in the Western United States, effectively reversing the decline in water levels at Lakes Mead and Powell, the two largest reservoirs in the country. As a result of these improved conditions, Lake Mead’s water level has increased by approximately 20 feet compared to August 2022.

• NWS weather outlook: Dangerous Heat Wave continues over the Pacific Northwest/Northern Rockies as heat builds back in over Texas Thursday... ...Severe thunderstorms possible for the Upper Midwest Wednesday... ...Showers, thunderstorms, and isolated flash flooding will continue across the Four Corners region.

Items in Pro Farmer’s First Thing Today include:

• Modest corrective gains in grains overnight
• hina warns floods could aggravate crop diseases, infestation in northeast
• Cattle futures remain well below cash market
• Hog futures continue to roll over

— U.S. is engaged in discussions with Turkey, Ukraine, and neighboring countries to develop alternative export routes for Ukrainian grain, the Wall Street Journal reports (link). This initiative comes after Russia withdrew from an agreement that ensured the safety of food shipments across the Black Sea, leading to concerns about the stability of grain exports.

The U.S.-supported plan aims to enhance Ukraine’s capacity to export four million tons of grain monthly through the Danube River by October. This route would involve sending much of the grain via the Danube and Black Sea to nearby Romanian ports, from where it would be shipped to other destinations. While this approach is slower and more costly, it serves as an alternative to the Black Sea shipping corridor established last year under the now-defunct agreement involving Russia, Turkey, and the United Nations.

Efforts to increase export capacity through the Danube are running concurrently with Turkish and UN attempts to persuade Russia to rejoin the grain deal. Turkish President Recep Tayyip Erdogan, who played a role in brokering the initial agreement, is under pressure to restore the deal before Ukraine’s summer and fall harvests accumulate in early September.

The U.S. is considering various options, the WSJ article detailed, including military measures, to safeguard ships traveling to and from Ukraine’s Danube ports. However, the specifics of these options and the countries involved have not been disclosed.

U.S. officials discussed the effort with leaders from Ukraine, Moldova, and Romania during a meeting in Romania. The European Union’s “solidarity lanes,” established to facilitate the movement of grain and other goods in and out of Ukraine, have been instrumental in maintaining grain exports amid the crisis. However, these lanes have also faced challenges, such as staffing shortages and disputes between countries.

The Danube route remains Ukraine’s only means of exporting grain via the Black Sea, with Russia threatening this route and intercepting ships. In response, Ukraine has utilized maritime drones to target Russian warships and infrastructure, and it has declared a “war risk” area around Russian ports on the Black Sea.

Bottom line: Overall, the U.S.-led efforts to establish alternative export routes for Ukrainian grain demonstrate how stakeholders are preparing for potential scenarios where Russia does not rejoin the original agreement in time to facilitate the movement of harvests.

— Russian drones carried out an attack on the Ukrainian Danube River port of Reni, causing damage to grain silos and warehouses. Ukrainian officials reported that the attack occurred on Wednesday night, with the main target being the port and grain infrastructure in the southern part of the Odesa region. The regional governor, Oleh Kiper, confirmed the attack on social media platform Telegram. Despite the attack, an industry source suggested that the port was still operational after the incident.

— Regarding Ukrainian grain exports, Reuters reported that Ukrainian grain shipments through the Romanian port of Constanta have reached 8.1 million metric tons in the first seven months of 2023. This figure marks an increase from the 7.5 million metric tons reported at the end of June. Overall, the port authority has handled a total of 18.9 million metric tons of grain during the first seven months of the year.

Data from the Ukrainian Agriculture Ministry showed grain exports totaling 3.3 MMT so far in the 2023-24 marketing year (July/June), including 1.6 MMT corn, 1.3 MMT wheat, and 397,000 metric tons of barley.

— Biden administration changing regulatory analytical methods. The Biden Administration is shifting the approach to regulatory analysis, potentially making it easier to implement new rules while obfuscating their costs, the Wall Street Journal said in an editorial (link). This change involves revising the guidance provided by the White House Office of Management and Budget (OMB), which instructs federal agencies on how to calculate the financial impact of regulations. Typically, OMB’s role is to ensure regulations justify their costs based on established criteria. The recent update, prompted by President Biden’s executive order to “modernize the regulatory process,” alters these dynamics.

Under this new guidance, a “significant regulatory action” is redefined as one with an anticipated annual economic cost of $200 million, up from the current $100 million threshold. Additionally, accounting techniques are employed to downplay the perceived impact on the economy and society. Furthermore, OMB introduces changes on the benefit side of the cost-benefit analysis, allowing consideration of “global effects” of regulations, not just their impact on Americans. This adjustment is seen as a green light for climate-related regulations.

Although this development might not garner attention, its implications are considerable, potentially surpassing the impact of most congressional actions. Critics, including 26 state Attorneys General, argue that these changes will erode the role of states in rulemaking and empower federal regulators further. By shifting the discount rate and adjusting the time horizon of regulatory analysis, the administration can favor the presumed benefits of progressive regulations over their costs.

The Biden Administration has already imposed more regulatory costs on the economy than recent predecessors, including the Obama Administration. With a surge in new regulations, the average annual count of “economically significant” regulations is expected to rise significantly under the updated guidance. Despite this, the apparent number of regulations could appear lower if the economic threshold is increased to $200 million.

Facts and figures. Economist Casey Mulligan from the University of Chicago has assessed the economic consequences of Biden administration rules through 2022. His analysis reveals an estimated cost of $5,019 per household, a 15% increase compared to the $4,353 incurred during a similar timeframe under the Obama administration. Notably, the Trump administration had managed to reduce regulatory costs by $2,636. Additionally, the Competitive Enterprise Institute’s Clyde Wayne Crews reports that the Biden Administration has 297 “economically significant” regulations in the pipeline. On average, President Biden has issued 97 such regulations per year, surpassing the averages of 69 per year under President Obama and 49 per year under President George W. Bush. However, if the threshold for designating regulations as “economically significant” is raised to $200 million, as proposed, the apparent number of regulations could decrease. This strategy aims to manage public perception and diminish the emphasis on regulatory activity.

— China’s defense minister, Li Shangfu, issued a warning against “playing with fire” regarding Taiwan, indirectly targeting the U.S. during his address at a security conference in Moscow. He cautioned that attempts to utilize Taiwan to contain China would ultimately fail. This stance aligns with previous statements by Chinese officials, but the location of the speech holds significance due to Moscow’s ongoing conflict in Ukraine. The Communist Party of China asserts control over Taiwan, a self-governing democracy, and has expressed its determination to gain control, even through force if necessary. China has criticized American involvement with Taiwan, including arms sales, as the U.S. lacks official diplomatic relations with the island.

Close ties with Moscow. Li’s appearance at the Moscow Conference on International Security was part of a broader trip to Russia and Belarus, reinforcing China’s security ties with Moscow despite Russia’s actions in Ukraine. This marks Li’s second visit to Russia since assuming his role as defense chief earlier in the year. The conference was attended by senior defense officials from various “friendly states,” excluding Western nations. Both Li and Russian President Vladimir Putin accused the U.S. of exacerbating global conflicts, with China using similar rhetoric, despite positioning itself as a neutral party promoting peace.

Li highlighted China’s military as a force dedicated to maintaining global peace, asserting that Chinese leader Xi Jinping seeks to stabilize the chaotic global security landscape. Li expressed China’s willingness to collaborate with other militaries to strengthen trust and cooperation.

Li’s discussions with his Russian counterpart, Sergei Shoigu, centered on military cooperation between their countries, which often engage in joint exercises, including naval patrols. Li also held bilateral meetings with defense departments and military leaders from Iran, Saudi Arabia, Kazakhstan, Vietnam, and other countries on the sidelines of the conference.

— Payment fallout at Chinese shadow bank Zhongrong deepens. Zhongrong International Trust Co., a major Chinese shadow bank partially owned by Zhongzhi Enterprise Group Co., is facing deeper troubles than previously thought, according to reports. The company has missed payments on dozens of products and is experiencing liquidity challenges, indicating a potentially wider crisis in China’s financial sector.

Wang Qiang, the board secretary of Zhongrong, informed investors that the company missed payments on a batch of products on Aug. 8, besides delays on at least 10 others since late July. Over 30 products are now overdue, and some short-term instrument redemptions have been suspended. Wang mentioned that the company’s short-term liquidity has abruptly dried up, and he referred to the growing number of missed payment products as a “tsunami” of concerns from investors.

The increasing number of delays highlights deeper issues within Zhongzhi, which manages $138 billion. This situation has led Chinese authorities to establish a task force to assess potential contagion risks, with the banking regulator investigating risks at Zhongzhi.

Analysts say the liquidity challenges reveal how problems in China’s property sector and weakening economy are spreading into the financial sector. Many trust products are backed by real estate projects linked to troubled developers like China Evergrande Group.

Zhongrong, a significant player in China’s $2.9 trillion trust industry, manages savings from affluent households and corporate clients to make loans and investments. The company has 270 high-yield products totaling 39.5 billion yuan ($5.4 billion) due this year.

Wang dismissed rumors that the company had stopped payments on all its products. He attributed the liquidity challenges to unexpected circumstances, making it difficult to meet short-term debt obligations due to the long-term and illiquid nature of most underlying assets. Zhongrong is working to limit the fallout from defaults and stabilize its operations to ensure repayment. Zhongzhi is part of Beijing’s efforts to regulate private wealth managers and reduce risks for retail clients who invest in these products.

Bottom line: The broader concern is that stress in the property sector could trigger strains in the financial system, impacting credit expansion and economic growth. Bloomberg Economics noted that the trust sector’s exposure to real estate is substantial, and Zhongrong’s issues could contribute to a negative feedback loop affecting multiple sectors of the economy.

Of note: Fitch may reconsider China’s A+ rating if bank and corporate debt become “real liabilities for the government.”

— In July 2023, the average prices of new homes in China’s major 70 cities saw a year-on-year decline of 0.1%, following a slight increase of 0.1 percent in the previous month. This marks the fifth instance of price decline this year, reflecting the ongoing property crisis and a sluggish economic recovery. Looking at a monthly perspective, new home prices experienced a 0.2%t decrease, marking the first such decline in the year. Despite Beijing’s attempts to provide financial support to developers and offer incentives to first-time home buyers and those looking to upgrade, the struggling property sector has not seen a revival. Consumer spending remains weak, contributing to the challenges faced by the sector.

— Yield gap between China and U.S. widens to highest since 2007. The yield differential between the China and U.S. benchmark 10-year government bonds widened to the highest since February 2007 on Wednesday, as investors speculated China’s central bank would ease monetary policy further after a surprise rate cut on Tuesday, even if it puts the yuan under pressure. China is loosening monetary policy to save its foundering economy, while the U.S. and most other major central banks are tightening policy to combat high inflation. Foreign holdings in China’s onshore yuan bonds declined in July due to the interest rate differential between China and the U.S. and investors’ disappointment that Beijing has not delivered enough economic stimulus.

— China warns floods could aggravate crop diseases, infestation in northeast. China called for more measures to protect its crops after warning recent floods in its northeast grain belt could worsen diseases and infestations. So far, diseases and pest infestations were “relatively light” with no significant impact on grain production, the ag ministry said. But it warned the flooding “may exacerbate the prevalence” of diseases and pest infestations that impact crops.

— Higher Chinese hog prices expected in H2. Chinese pork processing giant WH Group Ltd expects hog prices in China to rise 10% to 20% in the second half of 2023 from the first six months, supported by stronger demand and smaller supply glut. The head of WH Group forecast the median hog price to reach about 16 yuan ($2.20) per kilogram (kg) in the second half of this year, up from an average of 15.12 yuan in the first half, but the average 2023 price would still be significantly lower than 2022. WH Group executives also said the recent heavy rains and flooding in northern China did not affect its production.

— Indonesia requests WTO consultations with EU on biodiesel import duties. Indonesia initiated a request for consultations with the European Union (EU) at the World Trade Organization (WTO) regarding the imposition of countervailing duties by the EU on imports of Indonesian biodiesel. Indonesia contends that these duties, as well as the investigation leading to their imposition, are in violation of WTO regulations.

Background. Since 2019, the EU has imposed countervailing duties on Indonesian biodiesel, ranging from 8% to 18%. This has significantly impacted Indonesian biodiesel exports, which amounted to 1.2 million metric tons in 2019, down by 28% compared to the previous year. In 2022, Indonesia’s biodiesel exports were 435,827 metric tons, with 22.47% of these exports destined for the EU.

Indonesia argues that the imposition of import duties has inflicted substantial damage on its biodiesel industry, particularly as the global economy was in the early stages of recovery from the Covid-19 pandemic. Djatmiko Bris Witjaksono, the Director General of International Trade Cooperation at Indonesia’s trade ministry, emphasized the adverse impact of the duties on the country’s industry.

Upshot: By seeking consultations at the WTO, Indonesia aims to address its concerns and disputes regarding the EU’s countervailing duties on biodiesel imports.

— USDA is out with a lengthy press release touting all they did since the first anniversary of the Inflation Reduction Act... aka the Climate Bill.

— EPA denied two petitions from environmental groups which sought to tighten water quality and pollution regulations for large farms. The petitions sought revisions to regulations under clean water laws, specifically the Concentrated Animal Feeding Operations (CAFOs) program, which falls under the National Pollutant Discharge Elimination System (NPDES). The two petitions were submitted in 2017 and 2022, and in October 2022, EPA agreed to respond to the 2017 petition by a court-approved deadline. The 2017 petition called for an expansion of operator coverage under the rules, better compliance monitoring, and improved nutrient management plans.

Instead of granting the petitions, the EPA has decided to conduct a thorough assessment of the CAFOs program. This evaluation will involve a detailed study of CAFOs’ effluent limitation guidelines and the establishment of a new federal advisory committee under the existing EPA subcommittee for farms, ranches, and rural communities. The advisory committee will include a diverse range of stakeholders to provide input on improving the CAFOs program. EPA believes that a comprehensive evaluation is necessary before determining whether any regulatory revisions are required.

EPA will convene an Animal Agriculture and Water Quality (AAWQ) subcommittee under the existing Farm, Ranch, and Rural Communities Federal Advisory Committee to hear from farmers, community groups, researchers, state agencies, and others about the most effective and efficient ways to reduce pollutants generated from CAFOs.

EPA plans six to nine public subcommittee meetings over the next 12 to 18 months which will alternate between in-person sessions in Washington, DC, and virtual meetings. After the detailed study and the AAWQ effort, “EPA will consider whether to revise its regulations,” the agency said, adding that it would specifically “assess whether it can address water quality concerns related to CAFOs through improvements to implementation, enforcement, and other non-regulatory initiatives, or whether regulatory revisions are appropriate.” EPA said it wants to have a “strong indication that such revisions are the most effective and appropriate way to reduce discharges from CAFOs before undertaking such an effort.”

Of note: EPA acknowledged that the regulatory actions to revise the rules “raises complex legal issues,” indicating the agency fully expects that if there are any regulatory changes pursued, they will likely be challenged in court.

— In a significant shift, traditional television usage has fallen below 50% for the first time, as reported by Nielsen’s monthly streaming report. This encompassed both broadcast and pay-TV. Simultaneously, streaming usage has climbed to nearly 39%, marking its highest share since Nielsen commenced tracking these figures in June 2021. The trend reflects changing consumer preferences, with many abandoning traditional TV bundles due to rising prices. However, streaming services have also been increasing their prices to bolster revenue, signaling a shifting landscape for television consumption.

— North Korea publicly acknowledged that U.S. Army Pvt. Travis King crossed into its territory, marking the first time it has been confirmed by North Korean authorities. King’s case gained global attention when he became the first U.S. soldier to cross into North Korea since 1982. According to U.S. defense officials, King crossed without authorization during a civilian tour within the demilitarized zone. North Korean state-run media released a statement stating that King expressed his intention to seek refuge in North Korea or a third country. The media also claimed that King confessed to entering North Korea due to his negative experiences with mistreatment and racial discrimination within the U.S. Army. This revelation has sparked concerns about his well-being, leading his family to appeal for humane treatment.

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