FBI Investigates New Orleans Attack as Terrorism; Possible Link with Tesla Cybertruck Explosion in Las Vegas

News/Markets/Policy Updates: Jan. 2, 2025

— FBI investigates Bourbon Street attack as terrorism. The FBI is investigating the Bourbon Street attack in New Orleans as a terrorism case after discovering an Islamic State flag in the suspect’s vehicle and a bomb nearby. The attack, which occurred early Wednesday, left 10 people dead and dozens injured. The suspect, Shamsud-Din Jabbar, a 42-year-old U.S. citizen from Texas, drove a truck into a crowd of New Year’s revelers. The FBI said it believes Jabbar didn’t act alone and is actively pursuing four others who were observed on video planting IEDs elsewhere in the city. Initially, there was confusion about whether the incident qualified as terrorism. However, federal officials confirmed their classification after finding evidence suggesting ideological motives, including the use of a vehicle as a weapon and an improvised bomb. Authorities emphasize that defining terrorism involves not just the method of violence but also the perpetrator’s intent and ideology, distinguishing it from other violent crimes. The investigation is ongoing.

Of note: The city is hosting the Super Bowl next month.

Meanwhile, federal authorities are investigating whether there may be a link with a deadly blast outside Trump International Hotel in Las Vegas just hours later, President Joe Biden told the nation. The Las Vegas incident killed one, injured seven, forced an evacuation of the hotel and sent terrified guests pouring from the building Wednesday afternoon. It happened after a Tesla Cybertruck caught fire and exploded. “We’re tracking the explosion of a cyber truck outside the Trump Hotel in Las Vegas,” Biden said in public remarks. “Law enforcement and the intelligence community are investigating this as well, including whether there’s any possible connection with attack in New Orleans.”

Another impact: The terrorist attack in Louisiana has some Republicans calling to expedite Senate confirmation of President-elect Donald Trump’s national security nominees, according to Punchbowl News.

— Equities today: Asian and European stock indexes were mixed overnight. U.S. stock indexes are pointed toward solidly higher openings. In Asia, Japan closed. Hong Kong -2.2%. China -2.7%. India +1.8%. In Europe, at midday, London +0.3%. Paris -0.7%. Frankfurt +0.1%. China’s CSI 300 Index plummeted 2.9%, marking its worst start to a year since 2016. The decline is attributed to disappointing manufacturing data and concerns over a potential tariff increase. U.S. markets show signs of recovery after a four-day downturn, with equity futures rallying. Tesla’s pre-market gain of 1% reflects optimism ahead of its vehicle delivery report.

Of note: “For the last four years, the first trading day has been a contrarian indicator, with the S&P 500 ending the year in the opposite direction it moved on the first day.” —
Jim Reid Deutsche Bank macro strategist.

Equities on Tuesday, Dec. 31: The Dow fell 29.51 points, 0.1%, to close at 42,544.229. The S&P 500 dropped 25.41 points, 0.43%, to end at 5,881.637. The Nasdaq declined 175.37 points, 0.9%, closing at 19,310.79.

Yearly change: The S&P 500 was up 24% in 2024, compared to a 24.2% rise in 2023. It was the index’s best two-year performance since the dot-com bubble of 1998. The Nasdaq climbed 30.8%, versus 43.4% last year. The Dow was up 12.8%, compared to 28.4% in 2023.

(Company reports, FactSet, NYT )

— What happened to the Santa Claus rally? Stocks tend to rise in what is known as a “Santa Claus rally” over the period that spans the last five trading days of the year through the first two of the next. That has not occurred. Still time, though. Over the first five days of that stretch — the last trading days of 2024 — the S&P 500 has fallen 1.5% and is poised to miss out on a Santa Claus rally for a second straight season. Since 1950, the S&P 500 has historically averaged a gain of 1.3% and climbed 77% of the time during the Santa rally period, according to Dow Jones Market Data.

(FactSet, WSJ)

— U.S. Steel shares surge amid Nippon Steel’s bid to win Biden’s approval. Nippon Steel Corp. has proposed granting the U.S. gov’t veto power over any reduction in U.S. Steel Corp.’s production capacity in a bid to secure President Joe Biden’s approval for its $14.1 billion acquisition of the American steelmaker, the Washington Post reports (link). The proposal aims to address concerns from the Committee on Foreign Investment in the United States (CFIUS), which warned the takeover could harm U.S. steel output.

U.S. Steel’s shares surged 11% on the news, trading at $33.75, though still below Nippon’s $55-a-share offer. The White House has acknowledged receipt of CFIUS’s evaluation, leaving Biden few days to decide. While Biden has expressed opposition to foreign ownership of the company, a definitive stance has not been announced. The acquisition remains a contentious issue, with the United Steelworkers union strongly opposed, though some lawmakers and local officials have urged approval.

Of note: With President-elect Donald Trump also vowing to block the deal, the decision is expected before his inauguration.

— The U.S. dollar is entering the new year on a high — and analysts signal more strength ahead.

(BoA Global Research, Bruegel)

— Gold futures have risen 0.3% to $2,647.90 per troy ounce as the market looks for new drivers to set the direction for precious metals. Despite trading in a narrow range during December, gold had a stellar 2024, gaining approximately 27% — its strongest annual return since 2010, according to Deutsche Bank. Analysts attribute this performance to central bank rate cuts and ongoing geopolitical concerns, which have bolstered the appeal of non-yielding bullion.

— Tesla: New sales data is due from the electric-vehicle maker. Analysts expect fourth-quarter deliveries to fall just shy of the roughly 515,000 units needed for full-year deliveries to surpass 2023’s total. Shares added more than 1% premarket.

— Debt ceiling reinstated as U.S. faces fiscal deadline. The U.S. debt ceiling was reinstated today at just under $36.2 trillion. While Congress has several months to act before a potential default, President-elect Donald Trump is urging GOP lawmakers to address the issue before his Jan. 20 inauguration. The Treasury Department will soon need to deploy extraordinary measures to prevent a default, which could disrupt payments such as Social Security benefits and federal workers’ salaries. Failure to act could destabilize global markets and the economy.

— Eurozone manufacturing activity shrank further in December, with the S&P Global Purchasing Managers’ Index slipping to 45.1 from 45.2 in November, staying below the 50-growth threshold. Output declined in major economies like France, Germany, and Italy, while Spain saw modest growth. The continued contraction may prompt the European Central Bank to consider more aggressive interest-rate cuts at its Jan. 25 meeting.

(Exchanges)

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Note: Recommended stock and bond market holiday schedule from the New York Stock Exchange (NYSE) and SIFMA, the Securities Industry and Financial Markets Association. This schedule is subject to change.

— Energy markets today: European gas prices have surged to their highest levels since October 2023, driven by a combination of freezing winter temperatures and a halt in Russian gas deliveries via Ukraine. The stoppage occurred on New Year’s Day after the expiration of a transit contract, with no replacement agreement established. This development underscores Europe’s vulnerability to energy supply disruptions, particularly during periods of heightened demand, and may intensify efforts to diversify energy sources and strengthen energy security measures. “European gas storage ended 2024 at its lowest year-end level in three years, and the recent increase in prices is set to add further to inflationary pressures,” Henry Allen, a markets strategist at Deutsche Bank, wrote in a research note this morning.

(FactSet, NYT)

Brent traded above $75 a barrel, and West Texas Intermediate topped $72. The American Petroleum Institute (API) reported a drop of 1.4 million barrels in U.S. oil inventories last week. If confirmed by government data (due Thursday), this would mark the sixth consecutive week of inventory declines. Bloomberg notes that technical factors have contributed to oil price gains. Both major oil benchmarks closed above their 100-day moving averages on Tuesday for the first time since October, signaling a bullish trend. These developments are pushing crude prices toward the upper limit of the range they’ve been trading in since mid-October.

— Ukraine shuts down major Russian gas transit pipeline to Europe. Ukraine has halted the flow of natural gas through a key pipeline connecting Russia to Europe, marking a significant escalation in the energy battle tied to the war in Ukraine. The decision not to renew the transit agreement effectively cuts off Russia’s last major gas corridor to European markets. This move aims to undermine Moscow’s ability to fund its war efforts and reduce its leverage over European energy markets. While Ukraine and its allies have prepared for the disruption, it risks retaliation from Russia and potential regional instability. European nations like Slovakia and Moldova are particularly vulnerable, though alternative energy supplies and reserves are expected to mitigate immediate crises. Ukrainian President Volodymyr Zelenskyy framed the decision as a moral and strategic necessity, stating, “We won’t allow [Russia] to earn additional billions off our blood.” Meanwhile, the Kremlin faces further economic strain, with Gazprom, Russia’s state-controlled energy giant, already reeling from reduced European market share and substantial financial losses.

— Trump’s energy policy: A shift toward fossil fuels and mining in 2025. President-elect Donald Trump plans a dramatic shift in U.S. energy and environmental policies, signaling a departure from the Biden administration’s focus on combating climate change. Trump’s agenda prioritizes fossil fuels and mining, aiming to achieve American “energy dominance,” reduce energy costs, and roll back regulatory barriers.

Of note: While Trump can overturn Biden-era executive orders and implement industry-friendly policies, experts highlight constraints like market forces, economic feasibility, and legal challenges that may temper the impact. Trump’s appointments, such as North Dakota Gov. Doug Burgum for Interior Secretary and Liberty Energy CEO Chris Wright for Energy Secretary, signal a pro-industry stance. However, issues like regulatory processes for mining and oil production, market dynamics, and litigation timelines remain significant hurdles.

Experts predict the long-term impact of these policies will depend on Congress’ willingness to enact meaningful reforms and how global markets respond to shifts in U.S. energy strategy.

— From oversupply to Trump 2.0: Outlook for EV batteries in 2025. The global EV battery market faces significant shifts in 2025, according to the South China Morning Post (link). While falling prices, innovative technologies, and renewable energy demand present opportunities, challenges like oversupply, geopolitical tensions, and changing U.S. policies under a Trump administration loom large.

Key trends:

· Pricing decline: Average EV battery prices are projected to drop to $90/kWh in 2025, a 50% decrease from 2023 levels, driven by technological advancements and falling battery metal costs.

· Lithium oversupply: Increased production and evolving battery technologies are likely to sustain lithium price struggles, despite potential production cuts by major players.

· Dominant technologies: LFP ((Lithium Iron Phosphate) and NCM (Nickel Cobalt Manganese) batteries will account for over 80% of the market. While solid-state and sodium-ion batteries show promise, mass adoption remains years away.

Global dynamics:

· China’s role: As the leader in EV and energy storage systems (ESS), China is expected to maintain its dominance, accounting for 58% of global EV sales in 2025.

· ESS growth: Renewable energy needs will fuel ESS battery demand, with energy storage capacity in China projected to grow substantially by 2030.

Geopolitical impact:

· Trump’s return: Policy changes, including repealing EV incentives and imposing higher tariffs on Chinese imports, could disrupt the global market, raising battery costs in the U.S.

— Indonesia’s B40 palm oil delay causes market uncertainty. Indonesia has yet to implement a higher mandatory blend of biodiesel planned for Jan. 1 as industry participants await technical details of the new regulation, causing confusion among palm oil traders. The government had pledged to mandate a 40% mix of palm oil-based fuel in biodiesel from Jan. 1, known as B40, from a 35% blend. As of Thursday, Indonesian state energy firm Pertamina, which operates the country’s largest petrol station network, and biodiesel producers’ group APROBI said they were waiting for the relevant official decrees before selling the fuel. Members of APROBI cannot draw contracts for biodiesel distribution without a decree from the government, Secretary General Ernest Gunawan said.

— Ag markets today: There was no overnight grain trade, as markets remained closed for New Year’s Day. Grain and livestock markets will resume trading at 8:30 a.m. CT. The U.S. dollar index is more than 200 points higher and front-month crude oil futures are around $1.00 higher.

Steady/firmer cash cattle trade expected. Given negative margins, packers aren’t expected to buy a lot of cattle this week, though cash sources expect prices to be no worse than steady with week-ago as feedlots have leverage. However, some cash sources feel packers are short-bought and may get more aggressive with bids.

Cash hog index, pork cutout drop. The CME lean hog index is down 8 cents to $84.27 as of Dec. 30, the third straight daily decline. The pork cutout dropped $4.02 on Tuesday to $90.30 amid sharp losses in all cuts except ribs.

— Weekly export sales pushed back to Friday. Due to Wednesday’s New Year’s holiday, export sales data for the week ended Dec. 26 will be published Friday morning.

— Agriculture markets Tuesday, Dec. 31:
• Corn: March corn futures rose 6 1/4 cents to $4.58 1/2, near the daily high and posted at a six-month-high close, but still marked at 55 3/4 cent yearly decline.
• Soy complex: March soybeans rallied 18 3/4 cents to $10.10 1/2 but marked a yearly loss of $2.40 1/2. March soymeal rose $5.10 to $316.90 but is down $59.40 cents on the year. March soyoil rose 6 points to 40.36 cents but sunk 730 points from a year-ago.
• Wheat: March SRW futures climbed 3 1/4 cents to $5.51 1/2 and closed nearer session highs. March HRW futures rallied 3 1/2 cents to $5.59 1/4. March HRS futures rose 2 cents to $5.95 3/4.
• Cotton: March cotton fell 8 points to 68.40 cents and forged a yearly loss of 11.16 cents.
• Cattle: The December live cattle contract expired at $193.85, down 22.5 cents from Monday, at noon Tuesday. February futures bounced $1.30 to close at $191.60, while January feeders rallied $1.40 to $263.025 at the close.
• Hogs: February lean hogs fell 32 1/2 cents to $81.30, nearer the session high and hit a 2.5-month low early on.

— Egypt’s Mostakbal Misr receives its first imported wheat shipment. Egypt’s state grain buyer, Mostakbal Misr for Sustainable Development, received its first imported wheat shipment on Dec. 30, port data seen by Reuters showed. The 28,000-MT shipment arrived in Alexandria port onboard the Mikhail Nenashev. It is the first shipment for Mostakbal Misr, which took over Egypt’s supply of food commodities in December, replacing the General Authority for Supply Commodities that held the responsibility for decades.

— India’s sugar production plunges. Indian mills have produced 9.54 MMT of sugar since the season began on Oct. 1, down 15.5% from the same period last year, Indian Sugar and Bio-Energy Manufacturers Association (ISMA) said, as cane yields fell in the three biggest producing states. Lower output in the world’s second-largest sugar producer could eliminate the possibility of India allowing exports during 2024-25, ISMA noted.

— Southern Ag Today: Good news for U.S. producers… Now what? The final days of 2024 brought welcome relief for U.S. farmers, as Congress passed and President Biden signed HR 10545 (the American Relief Act) into law on Dec/ 21. This continuing resolution extends federal funding through March 14, 2025, averting a government shutdown, and provides critical support for agriculture by extending the 2018 Farm Bill through September 30, 2025. With overwhelming bipartisan support, the legislation also authorized $30.78 billion in disaster and economic loss assistance, including $10 billion specifically for economic aid to farmers.

However, the question now is how this assistance will be implemented. Producers and lenders are eager for clarity on the payment distribution. Congress provided USDA with detailed instructions, but uncertainties remain, particularly regarding payment rates for covered crops. While past guidance suggested using estimated rates, variations in minor crop estimates could affect the final payments.

To mitigate uncertainty, Southern Ag Today recommends lenders use 85% of the estimated rates when calculating loan packages (link). Payments are required to be distributed within 90 days of enactment, meaning clearer guidance should arrive before the spring planting season. This marks a crucial step forward, but the exact impact of this assistance depends on USDA’s execution in the coming months, the report concludes.

— When House Republicans open the new Congress on Friday, Trump said, “I think they’ll support Speaker Johnson ... He’s the one that can win right now. Almost everybody likes him. Others are very good, too, but they have 30 or 40 people that don’t like them.”

On his endorsement of H-1B visas to attract foreign workers, despite his past criticism of the program, Trump said: “I didn’t change my mind. I’ve always felt that we have to have the most competent people in our country ... We need smart people coming into our country, and we need a lot of people coming in. We are going to have jobs like we’ve never had before.”

— Chip Roy casts doubt on Mike Johnson’s speaker prospects. Rep. Chip Roy (R-Tex.) expressed skepticism about Speaker Mike Johnson’s (R-La.) ability to secure enough support to retain his leadership position in the House, despite an endorsement from President-elect Donald Trump. Speaking on Fox Business’ Varney & Co., Roy voiced concerns about Johnson’s record, particularly regarding fiscal policy, and indicated he remains undecided ahead of the Jan. 3 Speaker election. Roy suggested alternatives like Reps. Byron Donalds (R-Fla.) and Jim Jordan (R-Ohio) but acknowledged Johnson’s friendship and potential to lead effectively.

Of note: With Republicans holding a narrow majority, Johnson can only afford one defection if all members vote. Several GOP members, including Reps. Andy Biggs (Ariz.) and Thomas Massie (Ky.), have also withheld support, signaling challenges ahead for Johnson in securing the gavel.

Speaker election process: A majority vote is required to elect the speaker before any legislative business can proceed. Past elections, such as Rep. Kevin McCarthy’s in 2023, have stretched over multiple days and ballots.

“Potential delays: Failure to elect a speaker could prevent the House from organizing and delay the certification of Trump’s Electoral College victory, scheduled for Jan. 6.

Republican divisions: With a 219-215 majority, Johnson can only afford to lose one GOP vote if all Democrats support their candidate, Rep. Hakeem Jeffries (D., N.Y.). Notable Republicans like Massie and members of the House Freedom Caucus remain undecided or critical.

If the House fails to elect a speaker by Jan. 6, Trump’s presidency could face a historic delay, and a prolonged deadlock might elevate Sen. Chuck Grassley (R-Iowa), the Senate’s president pro tempore, to the presidency on Jan. 20. Johnson’s allies are urging unity to avoid this unprecedented outcome.

A GOP deal late last year raised the threshold for triggering a “motion to vacate” from one member to nine members (a member of the majority party and eight cosponsors). Link for details. Meanwhile, Democrats are strongly opposing a proposed House rules change that would let only Republicans trigger a vote to remove the Speaker. They argue this would stifle bipartisanship and make Speaker Johnson accountable solely to Republicans, not the full House. Rep. Jim McGovern (D-Mass.) criticized the move, saying it essentially makes Johnson the Speaker of the Republican Conference rather than the entire House. The House is set to vote on the package tomorrow, after the speaker is elected and members are sworn in — though that may be contingent on Johnson winning on the first ballot.

— Schumer endorses Wikler for DNC leadership. Chuck Schumer, the Senate Democratic leader, has endorsed Ben Wikler to lead the Democratic National Committee (DNC). Schumer described the Wisconsinite as a “tenacious organizer” and a “proven fundraiser,” emphasizing Wikler’s ability to deliver “proven results” for the party. The DNC will vote on its new leadership on February 1, as reported by Politico.

— Fiscal sanity: A path to sustainable federal spending. Sen. Ron Johnson (R-Wis.), in a commentary item in the Wall Street Journal (link), writes federal spending has surged dramatically since the pre-pandemic fiscal year 2019, when outlays stood at $4.447 trillion. The onset of Covid-19 pushed spending to an unprecedented $6.554 trillion in fiscal year (FY) 2020, reflecting emergency measures like $5.2 trillion in relief, including direct payments, unemployment benefits, and small business loans under the Paycheck Protection Program. While these actions aimed to cushion the economic blow, Johnson says they also led to waste, fraud, and inflation, with a dollar now worth only 81.8 cents compared to January 2020.

Johnson argues that pandemic-level spending has been unwisely institutionalized, with budgets consistently exceeding $6 trillion annually since 2020. President Biden’s proposed $7.3 trillion budget for fiscal 2025 represents a 63.3% increase from 2019, despite a modest 2.2% population growth.

To restore fiscal sanity, Johnson suggests using historical spending levels, adjusted for inflation and population growth, as a baseline. For example, setting the 2025 budget based on 1998 spending (adjusted) would balance the budget at $5.5 trillion, while baselines from 2014 or 2019 would still curb deficits significantly. He challenges policymakers to justify ongoing excessive spending and its contribution to ballooning federal debt, now over $36 trillion.

Bottom line: Johnson concludes this disciplined approach is essential to reversing the devaluation of the dollar and achieving fiscal sustainability. But a Capitol Hill veteran emails: “It’s just a peripheral conversation. We are not going to return to 1998 spending. I’m not against trying to rein in spending. I’m for it. But a practical approach is needed. We did not get into this hole overnight and we won’t get out of it overnight.”

— Retired Sen. Stabenow reflects on her mixed legacy. Jim Saksa from Congressional Quarterly writes that after 24 years in the Senate and nearly 50 years in public service, Michigan Democrat Debbie Stabenow is stepping away with a legacy defined by a focus on impactful policy. In a wide-ranging interview, she highlighted accomplishments in mental health funding, auto industry rescue efforts, and clean energy initiatives, while expressing concern about increasing partisanship in Washington.

Saksa noted Stabenow’s lasting reforms for mental health and addiction services or forging partnerships on Great Lakes restoration with Republicans like JD Vance.

But she noted her disappointment in Congress’ failure to pass a farm bill but voiced pride in efforts that bridged divides and delivered results.

As she returns to Michigan, Stabenow plans to remain engaged in advocacy on mental health, climate, and food security while enjoying newfound flexibility outside the demands of a legislative calendar.

Comments: Despite the description above, Stabenow was frequently an ideologue. She released her farm bill text in November 2024, which some Republicans criticized as too late and partisan — she unveiled a 1,397-page draft farm bill text with just weeks remaining in the congressional session. Sen. John Boozman (R-Ark.), Chair of the Senate Ag Committee in the new Congress, called it an “insulting 11th hour partisan proposal.” Her farm bill strategy appeared to be to run the clock to run the table. She succeeded often. But in 2024 her bluff was called. Bottom line: The problem is that Republicans were willing to the last minute to deal with her. She refused. She simply was not a deal maker in her final Senate days.

— HPAI outbreak hits poultry in five U.S. States, Ontario. Highly pathogenic avian influenza (HPAI) has been confirmed in commercial broiler and turkey flocks across multiple U.S. states and Ontario, Canada.

Broiler flocks affected:
· Arkansas: 227,500 chickens in Clay County (first 2024 case).
· Mississippi: 210,000 chickens in Copiah County (second 2024 case).
· Nebraska: 217,600 chickens in Johnson County (third 2024 case).

Turkey flocks affected:
· Wisconsin: 18,600 turkeys in Burnett County (third 2024 case).
· Missouri: 14,900 turkeys in Cooper County (fifth 2024 case).

In Canada, HPAI was detected in a commercial flock in Oxford County, Ontario, marking the province’s seventh flock infection of the year.

— The weight-reducing drugs revolution: Impact on the U.S. food industry. Weight-reducing drugs like GLP-1 agonists (e.g., Ozempic, Wegovy) are transforming the U.S. food landscape by altering consumer behavior and prompting industry adaptation. Some of the changes:

Changing consumer behavior:
· Reduced consumption: Daily calorie intake down 20%-30%; grocery spending by drug users dropped 9%. Walmart reports lower food purchases.
· Shifting preferences: Declines in sugary, fatty foods, and alcohol; increases in produce, protein, fish, and healthy fats.

Impact on food categories:
· Snacks/beverages: Predicted 3% consumption drop by 2035; baked goods and salty snacks most affected.
· Alcohol/fast food: Volume declines of 2% and 1-2%, respectively, anticipated by 2035.
· Sugar market is likely to experience shifts due to changing consumer behavior: By 2035, an estimated 7% of the U.S. population could be using GLP-1 drugs, potentially leading to a 3% drop in consumption of sugary and salty snacks.

· A closer look at sugar.
1. Per capita sugar consumption has been steady for the last 10 years — overall. While sweetener consumption per capita been declining, that is more from reduced HFCS consumption per capita.
2. Overall U.S. sugar production has been steadily increasing alongside a growing U.S. population — although, as mentioned, per capita consumption of sucrose has been steady.

Industry response:
· Product innovation: Companies like Nestlé and General Mills are offering smaller portions and healthier options.
· Marketing: Emphasis on “mini” or “bite-sized” products; pre-portioned meal kits targeting GLP-1 users.
· Portfolio reshaping: A focus on healthier, nutrient-rich alternatives.

Long-term outlook: Despite significant short-term disruptions, experts suggest the overall impact will remain manageable. Companies see this trend as an opportunity to align with evolving consumer needs, ensuring resilience and innovation in the face of dietary change. Several factors may mitigate the effects:
· Gradual change: The full impact is expected to unfold over time, with some estimates suggesting a 0.5% to 1% volume effect in 10 years for certain categories.
· Industry response: Food companies are already developing strategies to address changing consumer preferences, including “better-for-you” options and healthier snack alternatives.
· Market opportunities: There may be increased demand for “weight-loss management foods” such as protein shakes and meal replacements.

Broader economic implications. The shift away from sugary products could have ripple effects across various sectors:
· Retail impact: Food retailers may see a modest drop in spending, potentially offset by sales of weight-loss drugs in stores with pharmacies.
· Healthcare sector: The reduction in sugar consumption could lead to improved health outcomes, potentially affecting healthcare costs related to obesity and diabetes.
· Fitness industry: As GLP-1 drug users report increased exercise, there may be growth opportunities in the fitness and sportswear sectors.

Bottom line: While the full extent of the impact remains to be seen, it’s clear some food products will need to adapt to changing consumer behaviors driven by the increasing use of weight-loss medications. The trend towards reduced consumption of some products is likely to persist, prompting innovation and shifts in product offerings across the food and beverage landscape.

— Breakfast costs on the rise amid market challenges. The cost of breakfast staples continues to climb, with recent surges in prices for coffee and orange juice adding to the volatility of food commodities. While beef and eggs have historically been unstable, adverse weather and disease have driven orange-juice futures to record highs, even as other crops like corn and soybeans have seen price declines.

In November, food prices for home consumption rose at their fastest annual pace in a year. A Wall Street Journal report (link) says this trend challenges President-elect Donald Trump’s promise to reduce grocery expenses for Americans, underscoring how global market dynamics can disrupt domestic policy goals. Additionally, Trump’s proposed tariffs on major trading partners could further shake food-commodity markets.

— Potential dockworker strike threatens U.S. ports again. A renewed threat of a dockworker strike looms over America’s East and Gulf Coast ports. Leaders from a U.S. dockworkers’ union and the group that represents their employers are set to resume contract talks on Jan. 7.

Maersk, the world’s second-largest container carrier, has advised customers to remove cargo from these ports before Jan. 15, warning of a possible coast-wide strike starting Jan. 16 if no agreement is reached.

Background: The International Longshoremen’s Association (ILA), representing 47,000 cargo handlers, has been in stalled contract negotiations with the U.S. Maritime Alliance for over two months. Although a temporary deal in October averted a crisis with a 62% wage increase over six years, the key issue of automation remains unresolved. As the three-month delay ends, fears of port disruptions resurface, potentially impacting supply chains and consumer confidence.

Meanwhile, the dual threat of a U.S. port strike and Trump’s tariffs are boosting spot shipping rates, notes Bloomberg. The Drewry World Container Index released Thursday showed the rate for a 40-foot shipping container from Shanghai to New York rose 6.1% over the past week — that route’s third straight weekly advance — while the rate to Los Angeles gained 7.3%.

— Yemen: The U.S. military said that it had carried out a series of strikes on the Houthis, the Iranian-backed group that is targeting commercial ships in the Red Sea.

— Concerns over Biden administration’s trade renegotiations. Sen. Katie Britt (R-Ala.) has criticized (link) the Biden administration for allegedly conducting secretive renegotiations of key trade agreements, including the U.S.-Mexico-Canada Agreement (USMCA) and a separate deal with Colombia. These claims have sparked a broader debate over the transparency and implications of such efforts.

Sen. Britt accuses the administration of negotiating “behind closed doors” without adequately informing the public. The U.S. Chamber of Commerce has echoed these concerns, accusing the U.S. Trade Representative’s office of engaging in “secret” talks that could reshape investment protections.

A central issue is the potential modification of investor-state dispute settlement (ISDS) provisions. Critics, including Sen. Britt, argue these changes could undermine protections for U.S. companies investing in partner nations, jeopardizing their ability to operate in international markets.

Framing the negotiations as a strategic move, Sen. Britt claims the Biden administration is attempting to “shackle the coming Trump administration.” This highlights the potential long-term impacts of these talks on future trade policies.

These developments occur amid heightened scrutiny of U.S. trade policies. The Biden administration has emphasized reshaping trade agreements to strengthen domestic industries and integrate climate change considerations into policy frameworks.

Sen. Britt and others are urging the administration to provide more clarity on the renegotiations, emphasizing the importance of public discourse in shaping significant trade policy decisions.

— Mexico exempts wheat, ammonium sulfate from tariffs. Mexico said products including wheat, wheat flour and ammonium sulfate will be exempt from tariffs during 2025, according to a presidential decree.

— Five predictions for China in 2025. James Palmer’s analysis in Foreign Policy’s China Brief (link) examines five significant trends shaping China in the coming year:
1. A harsh trade war: With Donald Trump’s second term, his tariff-heavy policy could escalate economic tensions, intensifying China’s manufacturing struggles while leveraging its global supply chain strength.
2. Brooding public discontent: Amid record youth unemployment and lingering effects of the pandemic, social disillusionment is growing. U.S.-imposed tariffs could become a scapegoat for economic grievances.
3. Grassroots government crisis: Local governments face crippling debt and revenue shortfalls, leading to withheld wages and corruption. This financial strain could spark unpredictable public protests.
4. Global opportunities: As the U.S. withdraws from international organizations under Trump, China positions itself as a stable global leader, particularly in U.N. forums.
5. The PLA on a leash: Military reforms and anti-corruption drives are curbing the PLA’s capacity for adventurism, with a focus on resolving internal issues rather than engaging in conflict.

Bottom line: Palmer’s insights underscore both the challenges and opportunities facing China in 2025, painting a complex picture of its domestic and international dynamics.

— China’s manufacturing sector shows slower expansion in December. China’s private Caixin manufacturing purchasing managers index (PMI) indicated continued expansion for the third consecutive month in December, standing at 50.5, down from 51.5 in November. The slower pace highlights the stabilizing effect of Beijing’s recent economic stimulus measures.

While supply and demand improved, the pace of growth in output and new orders decelerated, and export demand remained weak amid global uncertainties. Employment contracted for the fourth straight month, and business optimism waned due to concerns over economic recovery and U.S./China trade tensions.

Experts suggest policies should focus on boosting household income and supporting disadvantaged groups to enhance economic resilience.

— Xi Jinping acknowledges economic challenges in new year’s address. In a rare deviation from his usual celebratory tone, Chinese President Xi Jinping acknowledged the challenges facing China’s faltering economy during his New Year’s address. Speaking on state broadcaster CCTV, Xi noted uncertainties in the external environment and the difficulty of transitioning economic drivers but urged confidence, asserting, “These can be overcome through hard work.”

The acknowledgment comes as China grapples with a sluggish post-pandemic recovery, marred by a struggling real estate sector and deflationary pressures. Recent government efforts include increased public borrowing, spending, and interest rate cuts aimed at stimulating weak consumer demand.

Xi confirmed that China’s economy grew “about 5%” in 2024, meeting the government’s target, though analysts question the validity of the figures. The Rhodium Group estimated growth closer to 2.4–2.8%, citing the government’s aggressive economic measures as inconsistent with moderate growth claims. The group projects 3–4.5% growth for 2025, contingent on favorable conditions.

(Gov’t data, Bloomberg survey )

— NWS outlook: Long duration lake-effect snow event continues downwind of the Great Lakes... ...Periods of locally heavy coastal rains and higher elevation snow
continue for much of the northwestern U.S.... ...Arctic air surges south from the Northern Plains through the Central and Eastern U.S.

(NWS)

2: First trading day of 2025
3: New Congress sworn in
3: House speaker election
6: House certification of 2024 presidential election
8: First Social Security benefit checks of the year; cost of living adjustment is 2.5%
9: Day of Mourning for the late former President Jimmy Carter
10: Bureau of Labor Statistics December employment situation report
10: USDA Annual Summary, WASDE, Crop Production, Grain Stocks, Winter Wheat/Canola Seedings
15: BLS consumer price index report (inflation)
15: Quarterly estimated taxes due
15: Last day to enroll in a 2025 health plan via HealthCare.gov
20: Inauguration Day
20: Martin Luther King Jr. birthday celebrated (federal gov’t, banks, markets closed)
20: College football national championship
24: USDA Food Price Outlook
26: AFC and NFC football championships
27: (tentative) First day IRS will begin accepting 2024 federal tax returns
28: Florida’s 1st and 6th special primaries
31: Employers and financial institutions should send out W-2 and 1099 tax forms
31: Federal Open Market Committee meets
31: USDA Cattle

WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | RFS | IRA: Biofuels | IRA: Ag | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum |