CPI Higher Than Expected, Giving Fed Ammo to Boost Rates Another 75 Basis Points

USDA’s NASS: Survey work for Florida citrus was done before Hurricane Ian

USDA daily export sales: 264,000 MT of soybeans to China and 242,000 MT of soybeans for delivery to unknown destinations during 2022-23.

U.S. equities made a major turnaround lower after release of the Consumer Price Index which again showed inflation hotter than expected. Details below.

Social Security recipients will get an 8.7% boost in their benefits in 2023. This follows a 5.9% rise in benefit checks this year — which was also the largest boost to benefits in nearly four decades. The cost-of living adjustment means the average recipient will receive more than $140 extra a month beginning in January, according to estimates released Thursday by the Social Security Administration.

Reports suggest U.K. PM Liz Truss will have to abandon more of her fiscal spending and tax cut plan. Conservative members of Parliament continued to push back against Truss’ fiscal plan and that’s helping the pound rally and gilt (bond) yields to decline.

Russia carried out a drone attack in the Kyiv region today, and Ukraine said it shot down several aerial vehicles in the south. Days of strikes have galvanized Western support for fortifying Ukraine’s air defenses. The U.S. and its allies plan to help Ukraine field an integrated system. Meanwhile, U.N. members overwhelmingly rejected Moscow’s move to annex four regions of Ukraine.

Federal Reserve officials acknowledged that their rate hike path will weigh on economic activity in the coming months and years. They “generally anticipated that the U.S. economy would grow at a below-trend pace in this and the coming few years, with the labor market becoming less tight,” according to the Federal Open Market Committee’s minutes for its Sept. 20-21 meeting. the word “restrictive” appeared 13 times in the September minutes, as opposed to 0 times in the July meeting’s minutes. Inflation showed up 89 times in the most recent meeting’s account vs. 7 times at the previous meeting’s minutes.

The Biden administration released its strategy for competing with adversaries, such as China and Russia... and it includes USTR Katherine Tai’s controversial views on trade policy.

Children as young as 5 are eligible for new Covid-19 boosters, after U.S. health regulators took steps to broaden access.

The congressional committee investigating the attack on the Capitol on January 6. 2021 will hold what is expected to be its final hearing today. This installment will focus on summarizing the case against Donald Trump for failing to stop those of his supporters who sacked the building in a bid to overturn his election loss. The committee plans to issue a final report before the next Congress sits in January, with a partial rule expected by some before Nov. 8 elections.

Election Day 2022 is 26 days away. Election Day 2024 is 754 days away.

Equities today: Global stock markets were mixed to weaker overnight. U.S. Dow plunged nearly 500 points on the opening, following another hotter-than-expected inflation report. In Asia, Japan -0.6%. Hong Kong -1.87%. China -0.30%. India -0.61%. In Europe, at midday, London -0.02%. Paris +0.22%. Frankfurt +0.54%.

U.S. equities yesterday: The Dow ended down after falling into negative territory in the final part of the trading day while the Nasdaq and S&P 500 moved between losses and gains much of the day before also ending lower. The Dow fell 28.34 points, 0.10%, at 29,210.85. The Nasdaq dropped 9.09 points, 0.09%, at 10,417.10. The S&P 500 declined 11.81 points, 0.33%, at 3,577.03.

On the corporate side, shares of PepsiCo rose over 4% after the beverage and snack company announced quarterly results that surprised investors on the upside.

Agriculture markets yesterday:

• Corn: December corn ended unchanged at $6.93.
• Soy complex: November soybeans surged 19 3/4 cents to $13.96, the contract’s highest close since Sept. 29. December soymeal rose $8.30 to $414.30. December soyoil rose 12 points to 65.59 cents.
• Wheat: December SRW wheat fell 18 3/4 cents to $8.82 1/4. December HRW wheat dropped 20 3/4 cents to $9.70.
• Cotton: December cotton futures dropped 394 points at 84.92 cents and near the session low.
• Cattle: December futures fell 12.5 cents to $148.45. November feeder futures advanced 47.5 cents to $176.675.
• Hogs: December lean hogs rose $1.175 to $80.70, the contract’s highest settlement since Sept. 23. The CME lean hog index fell 3 cents to $92.95 (as of Oct. 10) and is expected to drop another 46 cents today.
  

Ag markets today: Soybean futures pulled back overnight from their strong gains Wednesday, while wheat traded mildly higher after yesterday’s losses. Corn posted two-sided trade. As of 7:30 a.m. ET, corn futures were trading around a penny lower, soybeans were 2 to 3 cents lower, winter wheat futures were 2 to 4 cents higher and spring wheat was 4 to 6 cents higher. Front-month crude oil futures were modestly higher and the U.S. dollar index was more than 400 points lower this morning.

Technical viewpoints from Jim Wyckoff:

On tap today:

• U.S. Consumer Price Index for September is expected to increase 0.3% from one month earlier and 8.1% from one year earlier. Excluding food and energy, the CPI is forecast to rise 0.4% and 6.5%. (8:30 a.m. ET) UPDATE: See next item.
• U.S. jobless claims are expected to rise to 225,000 in the week ended Oct. 8 from 219,000 one week earlier. (8:30 a.m. ET)
• Treasury Department releases budget figures for September, the final month of the fiscal year, at 2 p.m. ET.
• Federal Reserve Bank of Atlanta President Raphael Bostic gives opening remarks at an employment conference at 1 p.m. ET.
• China’s consumer price index for September is expected to increase 2.9% from one year earlier and its producer-price index is forecast to rise 1%. (9:30 p.m. ET)

The Consumer Price Index rose by 0.4% in September, more than the 0.3% pre-report estimate, according to data released by the Bureau of Labor Statistics. The annual pace of inflation edged down to 8.2%, down from its summer peak but remaining at longtime highs. The update ensures more tough interest rate hikes to come. Equity futures fell, erasing earlier gains. Excluding volatile food and energy prices, core CPI accelerated 0.6% against the estimate for a 0.4% increase. Core inflation was up 6.6% from a year ago.

The September CPI report is a key data point set to be considered when the Fed holds its next meeting from Nov. 1-2. A solid September jobs report released days earlier also affirmed the Fed was likely to maintain a hawkish policy stance. The year-over-year measure of the CPI is likely to “remain elevated through the end of the year,” said Mark Hamrick, senior economic analyst at Bankrate. “There has been relief from high gasoline prices which tend to aggravate consumers the most, but elevated food and shelter prices appear to be sticking around for a while as unwanted visitors,” Hamrick said.

Meanwhile, relief in gas prices which fell 4.9% could be short-lived. The national average price of gas began to rise again in September, snapping a three-month streak of declines. Fears of another surge were exacerbated after OPEC and its ally Russia agreed to slash oil output despite the Biden administration’s objections.

As for food inflation:

• Fruit and vegetable index jumped 1.6% — 6.8% increase in the price of lettuce and 5% rise in apple prices. Potato prices rose 3.5%.
• Meat index rose 0.7% — 1.8% hike in pork prices and a 0.6% rise in poultry prices. Beef prices declined 0.1% in September.
• Dairy prices were 0.3% higher in September.
• Sugar and sweets were up 1.8%.
• Fats and oils rose 1.2%.
• Egg prices, which have surged 30.5% over the past 12 months due to an outbreak of avian influenza, fell 3.5% last month.
• Cereal and bakery products rose 0.9%.
  

Labor hoarding by companies gives hope that Fed can achieve soft landing. Policymakers are hoping that after struggling through the worst labor shortages America has experienced in at least several decades, employers will be hesitant to lay off workers even when the economy cools, the New York Times reports (link). The recent changes to hiring and layoff practices “may help prevent the kind of painful recession the Federal Reserve is hoping to avoid as it tries to combat persistent inflation.” Officials are “still hoping to achieve a soft landing” and “a few have speculated that today’s staffing woes will help them to pull it off, as companies try harder than they have in the past to weather a slowdown without cutting staff.”

The odds of an economic crunch in the next 12-18 months are about even, said Moody’s Analytics. But it should be “short and less than severe than typical” due to buoyant household finances.

Social Security Administration announces Social Security recipients will get an 8.7% boost in their benefits in 2023. This follows a 5.9% rise in benefit checks this year — which was also the largest boost to benefits in nearly four decades. The cost-of living adjustment means the average recipient will receive more than $140 extra a month beginning in January, according to estimates released Thursday by the Social Security Administration. This year, an average of 66 million Americans per month will have received a Social Security check. The program is a major source of income for the elderly, but monthly payments also flow to people with disabilities, as well as the relatives of workers who have died.

Federal Reserve officials expressed concern at their meeting last month over the persistence of high inflation, underscoring their intention to continue raising interest rates in large steps. “Participants commented that recent inflation data generally had come in above expectations and that, correspondingly, inflation was declining more slowly than they had previously been anticipating,” the minutes read.

Policy makers revised higher their expectations for rate increases, though some signaled caution about overdoing them amid risks of economic and financial volatility, according to minutes of the Sept. 20-21 confab released Wednesday. The Fed has lifted its benchmark federal-funds rate five times this year to a range between 3% and 3.25% from near zero, the most rapid pace of rate increases since the early 1980s.

“Many participants emphasized that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action,” the minutes noted.

Rising interest rates impacting housing. Mortgage rates have more than doubled since the start of the year, discouraging people from buying and refinancing. Mortgage applications to purchase a home last week fell to the lowest level since 2015, according to data from the Mortgage Bankers Association. Refinance applications were the lowest since 2000. “At this point, the trend in mortgage applications will take years to reverse as mortgage borrowers see few reasons to move and lose below-market rates and homebuyers slowly reset their expectations for affordability,” analysts at Contingent Macro Advisors said.

Department of Homeland Security for the first time intends to issue the maximum number of H-2B seasonal-worker visas allowed by law this year, a total of more than 130,000, the agency announced on Wednesday. The move comes amid labor shortages, particularly in low-wage sectors such as restaurants and hospitality.

IMF urges governments restrain spending to fight inflation. Governments fighting inflation should limit spending increases to programs focused on helping the poor, the International Monetary Fund (IMF) said Wednesday, as surging food and energy prices create hardships worldwide. Such measures could include discounts on utility bills and allowances for school meals and public transportation, limited to low-income households, said IMF economists in their latest report on global fiscal conditions. The IMF said policy makers should refrain from adopting price controls, subsidies or tax cuts for all households to cushion the effects of rising prices because such measures are costly and don’t work in the long run.

Liz Truss, Britain’s prime minister, faced increasing pressure from her Conservative MPs to reverse some of the tax cuts outlined in her recent “mini-budget.” Kwasi Kwarteng, her chancellor, said that the Bank of England will be responsible for any market volatility after Friday, when its emergency bond-buying scheme, introduced to help pension funds after the budget, must end. Just the day before, he had praised the central bank’s handling of the market turmoil.

Market perspectives:

• Outside markets: Stronger than expected U.S. inflation data whipsawed markets ahead of trading. Stock index futures pivoted from signaling gains of around 1% ahead of the CPI report, then plummeted to losses of 1.7% in the Dow and 2% in the S&P 500. The U.S. dollar index turned higher while crude oil futures reversed course from modest gains to now being down 1.8% for WTI and 1.3% for Brent. Gold futures also dropped under $1,655 per troy ounce and the yield on the 10-year US Treasury note moved above 4%.

• $5.224: Average cost of diesel in the U.S. for the week ending Oct. 10, up almost 39 cents from the previous week and the highest level since July 25, according to the U.S. Energy Information Administration.

• Global coal prices have skyrocketed since Russia’s invasion and European countries are looking as far afield as Australia for alternatives to Russian energy. Coal has even been rebounding in the U.S., with rail transports up 3.5% from a year ago in the first nine months of this year, according to the Association of American Railroads.

• USDA’s NASS: Survey work for Florida citrus was done before Hurricane Ian. USDA’s National Agricultural Statistics Service (NASS) said Wednesday that survey work for its Florida citrus forecast, the first for 2022-23, was completed before Hurricane Ida made landfall and the forecasts released Wednesday “do not reflect any potential impact from the hurricane.” The next citrus forecast will be in the Dec. 9 Crop Production report and “agricultural damage to crops, such as Florida’s citrus, will be evaluated over the next several weeks.” While the survey work for other crops extended beyond the initial landfall from Ida, NASS cautioned, “the full impact of the storm may not be reflected until future reports.”

As for citrus, the U.S. all orange production forecast was put at 3.19 million tonnes, down 8% from 2021-22, with Florida at 28.0 million boxes (1.26 million tons), down 32% from last year’s final utilization.

• India’s gov’t will allow exports of 397,262 tonnes of broken rice backed by letters of credit issued prior to the Sept. 8 decision to bar exports. Reuters reported the decision to halt broken rice exports had stranded nearly 1 million tonnes of rice moved to ports for export or in transit before the announcement was made.

• Ag trade: Japan purchased 94,140 MT of milling wheat in its weekly tender, including 25,390 MT U.S., 35,867 MT Canadian and 32,883 MT Australian. The Philippines tendered to buy 165,000 MT of feed wheat from unspecified origins.

• NWS weather: There is a Slight Risk of excessive rainfall over parts of the Northeast through Saturday morning... ...There is a Marginal Risk of severe thunderstorms over parts of the Northeast and Mid-Atlantic through Friday morning... ...There is a Critical Risk of fire weather over the Northern/Central Plains and light snow over the Upper Midwest.

Items in Pro Farmer’s First Thing Today include:

• Soybeans and wheat marginally reverse Wednesday’s price action overnight
• Weekly Export Sales report delayed until Friday due to Monday holiday
• Turkey wants to help Russia export grain, fertilizers (details in Russia/Ukraine section)
• Argentina to meet with wheat sector over crop concerns
• Cattle slaughter remains strong
• Pork cutout strengthens

— Summary: Ukraine’s Zaporizhzhia nuclear power plant lost power twice in the span of five days because of Russian shelling, forcing it to turn to diesel generators until the power was restored. Rafael Grossi, the head of the International Atomic Energy Agency, tweeted that it was a “deeply worrying development” that “underlines the urgent need for a nuclear safety & security protection zone around the site.” On Wednesday, the Kremlin also said that it had arrested eight individuals over the explosion on the Kerch Strait Bridge on Saturday. The suspects were Russian, Ukrainian, and Armenian citizens.

• Ukraine President Volodymyr Zelenskyy pleaded for more international help with air defense. He said Ukraine has only 10% of the air defense capability it needs, according to Reuters. Elsewhere, Russian leader Vladimir Putin is slated to meet with Turkey’s president, Recep Tayyip Erdogan. The Turkish leader is expected to formally offer to host peace talks between Russia and western nations to end the Ukraine war. Zelenskyy, however, has said he won’t negotiate with Putin and will only talk when Russian forces leave his country.
• Turkey wants to help Russia export grain, fertilizers. Turkish President Tayyip Erdogan said on Thursday that Ankara could work with Moscow on determining low-income countries to which Russian grains and fertilizers can be exported. “We are determined to strengthen and continue the grain exports under the Istanbul agreement and the transfer of Russian grain and fertilizer to less developed countries via Turkey,” Erdogan said. “It is important that we focus on the poor countries rather than developed countries.”

• U.S. considering ban on Russian aluminum. Bloomberg reports, “The Biden administration is considering a complete ban on Russian aluminum — long shielded from sanctions due to its importance in everything from automobiles and skyscrapers to iPhones — in response to Russia’s military escalation in Ukraine.” The White House is “eyeing three options: an outright ban, increasing tariffs to levels so punitive they would impose an effective ban, or sanctioning the company that produces the nation’s metal, United Co. Rusal International PJSC,” according to people familiar with the decision-making. Link for details.

• Russia’s federal gov’t surplus narrowed sharply in the first nine months of the year, less than half of the cumulative amount in the previous month and 96% less than this year’s peak in April, as revenues tanked while spending increased due to Moscow’s war efforts. Revenues have declined sharply since energy revenues, the major contributor to Russia’s earnings, suffered a sharp setback as Europe started to transition away from Russian oil and the Kremlin halted natural gas exports in retaliation to sanctions. Meanwhile, oil and natural gas prices have significantly fallen from their respective peaks. Expenditures are seen 19% higher than the corresponding period of the prior year and twice as much as growth in planned budget revenue. Consequently, Moscow allocated half of its $210 billion rainy-day fund to finance its looming budget deficit.

— Minority farmers sue over repeal of debt relief program. Four minority farmers filed suit in the U.S. Court of Federal Claims over repeal via the Inflation Reduction Act (IRA) of the minority debt relief effort for USDA borrowers previously held up in court by suits filed by white farmers who alleged discrimination since the effort was based on race, not need. The Virginia farmers filing the suit allege repeal of the debt relief effort is a breach of contract by the government, arguing some farmers made financial plans based on the expectation of getting debt relief. Reuters reported that around 14,000 farmers of color received letters from USDA in 2021 that promised debt relief of around $2.4 billion. The initial race-based debt relief effort was contained in the American Rescue Plan but did not proceed due to court challenges. The IRA repealed that debt forgiveness effort and replaced it with one based on need. The climate, health, and tax law earmarked $3.1 billion for “farm loan immediate relief for borrowers with at-risk agricultural operations” and $2.2 billion, to be administered by entities outside USDA, for payments of up to $500,000 each to farmers, ranchers, and forest landowners who had experienced discrimination in the past in USDA loan programs.

Civil rights attorney Ben Crump, who filed suit in the U.S. Court of Federal Claims, likened the situation to the loss of assistance to Black farmers after the Civil War.

“The U.S. government must honor its commitment to us and the thousands of Black, Native American, and other farmers of color who are being forced into bankruptcy and foreclosures,” said John Boyd, founder of the National Black Farmers Association and one of the “class representatives” in the suit.

— New farm bill, but same debate on food stamps. Watching a farm bill debate is getting boring, especially after you’ve reported on ten previous ones. This time, it is the same divisive argument as recent bills: funding for SNAP benefits (food stamps). And it always ends up with lawmakers plowing more money for the program, and that will likely be the case this time. Although lawmakers may try to cut SNAP benefits as part of the farm bill due in 2023, “we’re not going backwards,” said Senate Ag Committee chair Debbie Stabenow (D-Mich.) at a food conference on Thursday. Deadline for portions of the bill is Sept. 30, although “oftentimes there has to be an extension. So that may happen,” she said.

Recall that House Republicans proposed large cuts in SNAP in the 2014 and 2018 farm bills, without success. Stabenow correctly noted the Nov. 8 general election would determine the dynamics for the new farm bill. “It depends on who is in the majority in the House and the Senate … whether we’re going to have fights around going forwards or backwards,” said Stabenow at the Consumer Federation of America conference. “So, we’re not going to go backwards. But we’re going to need your help to make sure we don’t.”

Nutrition funding, heavily skewed by SNAP, accounts 84% of farm bill spending.

In an interesting exchange, Stabenow rejected a suggestion by an audience member to ban the purchase of sugary beverages with SNAP benefits as a pilot project against obesity. “I don’t think low-income people should be told they can’t do something that everybody else can do.” More than four of every 10 Americans is obese, according to CDC data.

— $ for water. The Interior Department will pay farmers, cities, and tribes up to $400 for each acre-foot (326,000 gallons) of water from the lower Colorado River they save through voluntary reductions in usage. Link for details.

— Livia Shmavonian tapped to run OMB’s “Made in America” office. The White House said Wednesday it is tapping a Commerce Department official to run an office aimed at spurring the U.S. government’s purchase of more American products and services. Livia Shmavonian was named to run the White House Office of Management and Budget’s (OMB) “Made in America” office created by President Biden last year. Shmavonian is coming from the Commerce Department’s International Trade Administration and was previously staff director for a Senate Finance trade subcommittee. She is replacing Celeste Drake, a former trade official at the AFL-CIO, who has moved to a new White House job.

— New BIO leadership. Rachel King, cofounder of GlycoMimetics, was named interim chief executive of the Biotechnology Innovation Organization a day after her predecessor abruptly left the job. Link for details.

— USTR details China Section 301 tariffs review. The Office of the US Trade Representative (USTR) finally revealed the next steps in the four-year review of tariffs the U.S. imposed in July and August 2018 via Section 301 on Chinese goods. USTR will open an online portal Nov. 15 for comments on the tariffs and whether they achieved objectives of the investigation prompting them, if other actions could be taken and the effects on the U.S. economy. Comments are due Jan. 17, 2023. USTR will post a copy of the questions they want answered by Nov. 1. USTR said that during the course of their review, they will determine if additional opportunities for comments would be appropriate via public hearings. The public comment timeline means nothing will happen on the Chinese tariffs until further into 2023 and an extension of the comment period is usually provided. Link to pre-publication notice on the comment request.

— Chinese authorities are reimposing some restrictions in Shanghai as Covid cases rise.

— Biden national security plan criticizes free trade agreements (FTAs). The Biden administration as noted released their updated national security strategy which set forth the White House’s priorities to meet global challenges. National security adviser Jake Sullivan said while competition among “major powers” is the first challenge needed to be addressed, he said “transnational challenges” like climate change, food insecurity and infectious diseases will also be focus points. The strategy again noted the U.S. push to integrate with the Indo/Pacific region to counter Chinese influence. The strategy includes implementing trade policy views from U.S. Trade Representative Katherine Tai — that traditional trade agreements no longer are a viable tool. “The strategy indicates that we have to turn the page on the traditional formula for trade and adopt a new model of economics, investment and trade that is fit for purpose for the coming decades of the 21st century,” Sullivan said.

— Putin: All energy infrastructure “under threat” following pipeline explosion. Russian President Vladimir Putin said on Wednesday that all energy infrastructure throughout the whole world is “under threat” following the Nord Stream 1 and 2 mystery explosions. Putin referred to the explosions that took the Nord Stream 1 pipeline — which had its flows halted prior to the blast — offline as an act of terror that set a dangerous precedent. “It shows that any critically important object of transport, energy or utilities infrastructure is under threat,” no matter where it is or who it belongs to. Also on Tuesday, the Polish pipeline operator PERN said it detected a leak on its Drzhba oil pipeline, which carries crude oil from Russia to Europe. PERN switched off the line to Germany immediately, and while the cause of the leak is unknown, Poland sees it for now as accidental.

— Judge pauses Wholestone Farms’ $500 million pork plant. On Oct. 11, Judge Sandra Hoglund Hanson put a halt to Wholestone Farms’ progress on its plans for a pork processing facility in Sioux Falls, South Dakota. Wholestone Farms estimated the project to cost $500 million and to employ over 1,100 workers. In addition, Wholestone planned to operate a butcher shop in Sioux Falls. In September, Smart Growth Sioux Falls, a group of area residents that opposes new slaughterhouses in the city, filed a civil complaint against Wholestone Farms, requesting the court deny the pork processor any permits needed to move forward with its proposed processing plant and butcher shop in Sioux Falls prior to the November 2022 election. According to Smart Growth, the city “preemptively” issued Wholestone a permit of occupancy for its butcher shop. The judge’s ruling will revoke all Wholestone’s permits approved by the city until Sioux Falls residents vote on the matter in November.

— Summary:

• Global Covid-19 cases at 623,260,964 with 6,562,631 deaths.
• U.S. case count is at 96,836,953 with 1,066,058 deaths.
• Johns Hopkins University Coronavirus Resource Center says there have been 624,198,981 doses administered, 267,373,101 have received at least one vaccine, or 81.46% of the U.S. population.

— FDA and CDC approved Pfizer’s vaccine for kids as young as 5 yesterday; Moderna’s booster was cleared for kids 6 and up. Both vaccines have been reformulated to target omicron variants. The new Moderna booster is available immediately in pharmacies and doctors’ offices. Pfizer’s is expected to be available next week.

— Very close Senate races. Take a look via Bloomberg:

— Biden: Supreme Court has become less impartial. President Biden is stepping up his criticism of the Supreme Court, calling it “more of an advocacy group” than “evenhanded” after the court struck down the constitutional right to an abortion, the Washington Post reported (link). His comments came Tuesday night at a virtual fundraiser for Rep. Lisa Blunt Rochester (D-Del.), where “Biden sought to frame the choices facing voters next month.” He said, “We’re less than 30 days away from the midterms, and the stakes are clear. The right to choose is on the ballot. Your Social Security you paid for your whole life is on the ballot. The safety of our kids and gun violence is on the ballot. Literally, the survival of the planet is … on the ballot. And your right to vote. And democracy itself is … on the ballot.”

— Jan. 6 House committee investigating the attack on the Capitol. The House panel will use what will probably be its last public hearing to reinforce its case against Donald Trump, an aide said. Today’s event will include new evidence buttressing the case, but no witnesses will testify live.

— White House releases Biden’s national security strategy. The White House on Wednesday released its national security strategy (link), outlining President Biden’s priorities at the start of what officials are calling a “decisive decade” for global challenges like climate change and competition among major powers. The strategy focuses broadly on investing domestically so the U.S. has a modern military and is not dependent on foreign supply chains. It also puts an emphasis on building alliances abroad to counter the influence of adversaries like China.

“The world is at an inflection point, and the choices we make today will set the terms on how we are set up to deal with the significant challenges and the significant opportunities faced in the years ahead,” national security adviser Jake Sullivan told reporters.

Sullivan said the administration highlighted two major challenges that the national security strategy needed to address. The first is “competition between major powers,” he said, pointing to both economic competition and Biden’s long-running warnings about democracies versus autocracies. The second key challenge is dealing with “transnational challenges” like climate change, food insecurity and infectious diseases, Sullivan added.

“We will effectively compete with the People’s Republic of China, which is the only competitor with both the intent and, increasingly, the capability to reshape the international order, while constraining a dangerous Russia,” the national security strategy states.

Lastly, the strategy calls for “affirmative engagement” across the world. It highlights the U.S. interest in the Indo-Pacific to counter Chinese influence; notes the importance of engagement in Africa to address global problems; and it calls greater integration in the Middle East critical to advancing peace efforts.

Perspective: Biden urged a speedier modernization of the military, though critics say his budget does not reflect his ambitions. And he took a darker view of the benefits of globalization than Presidents Bill Clinton or Barack Obama did, describing at length how it has fueled pandemics and disinformation and contributed to supply chain shortages. The document celebrates a new coherence among NATO countries but also includes warnings to Moscow that were clearly inserted to reflect a new era of containment. “The United States will not allow Russia, or any power, to achieve its objectives through using, or threatening to use, nuclear weapons,” the new document says, without providing any details.

— Winner of the fat bear contest: It’s the second victory for the bear nicknamed 747 — like the jumbo jet. Link for details.

WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | Student loan forgiveness | Russia/Ukraine war, lessons learned | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS | SCOTUS on Prop 12 |