Fed Focus Today as Market Expects Another Big Hike; Key Will Be Forward Guidance

Russia will resume participation in Black Sea grain deal

Most expect the FOMC to raise the Fed funds rate this afternoon by another 0.75%. However, market analyst Jim Wyckoff says the key issues for traders and investors may be answered by comments the FOMC and Powell make regarding the future path of U.S. monetary policy. “Specifically, will the Fed back off the accelerator on aggressively raising interest rates and begin to pivot? FOMC/Powell hints of a pivot are likely to boost risk assets like stocks and commodities. However, a still-aggressive tone on U.S. monetary policy coming from the Fed would likely pressure stocks, bonds and commodities.”

Left-leading Democrats/Independent Sanders openly questioned the Fed’s aggressive rate-increase policy, saying its approach reflected “an apparent disregard for the livelihoods of millions of working Americans.”

U.S. private companies add more jobs than expected. Private businesses in the U.S. unexpectedly created 239,000 jobs in October, the most in three months, and compared to market forecasts of 195,000. Details below. U.S. Dow opened around 90 points lower after the ADP data.

Another White House spin on inflation: Tweet from White notes “Seniors are getting the biggest increase in their Social Security checks in 10 years through President Biden’s leadership.” (Reality: the big hike is due to inflation.)

Russia will resume its participation in the Black Sea grain export deal, the country’s defense ministry announced. “The Russian Federation considers that the guarantees received at the moment appear sufficient, and resumes the implementation of the agreement,” the defense ministry said in a statement. The ministry said thanks to the involvement of the United Nations and Turkey, it obtained written guarantees from Ukraine that it would not use the humanitarian corridor and Ukrainian ports to conduct military operations against Russia. The U.N. said vessels loaded with grains are expected to move through Ukraine’s crop-export corridor on Thursday. More in Russia/Ukraine section.

Kyiv, Ukraine’s capital, will install more than 1,000 heating stations across the city this winter amid the threat of more Russian strikes, Mayor Vitali Klitschko said. The heating points, powered by generators, will provide necessities including heat, water and electricity to residents in the capital, Klitschko said, noting that the city would be prepared should future Russian attacks sever those supplies.

‘Dark clouds’ for trade. Shipping giant Maersk on Wednesday warned of gloomy times ahead for global trade, even as it reported record profit stemming from high rates charged by its ocean business. “With the war in Ukraine, an energy crisis in Europe, high inflation, and a looming global recession there are plenty of dark clouds on the horizon,” Søren Skou, the CEO of the Danish company, said in a statement. More in market section.

Vilsack announces $223 million in grant, loans for meat, poultry processing. As expected, USDA Secretary Tom Vilsack today in Omaha, Neb. will announce $223 million in taxpayer grants and loans to expand meat and poultry processing capacity and to address supply chain problems. Details below.

Sen. Roger Wicker (R-Miss.) is criticizing the Biden administration’s recent Jones Act waivers granted for shipments to Puerto Rico. Details in Policy section.

Euro-area manufacturing activity sank to the lowest level since the first Covid-19 lockdowns in 2020 as record inflation and a weakening global economy erode demand for goods. In the U.S., business activity contracted in October for a fourth straight month.

China has ordered a seven-day lockdown of `iPhone City’ — or the area around the main plant operated by Foxconn, the world’s largest iPhone factory. The move comes as Foxconn grappled with a Covid flare-up that forced some of its 200,000 staff into quarantine and pushed others to flee the facility. Earlier this week, rumors surfaced that China was forming a “reopening committee” as part of a new push to ease Covid restrictions. When asked about the potential new policy shift, China’s foreign ministry was said to have no knowledge of it, but the optimism surrounding the rumor (originated on social media) continued to buoy risk assets.

The U.S. ag sector is raising its usual high anxiety over Mexico’s potential ban on GMO corn. More in Trade Policy section.

CVS and others reach a tentative $12 billion settlement over the opioid crisis. CVS said it has agreed in principle to pay $5 billion to resolve thousands of state and local lawsuits accusing it and other chains of mishandling opioids. Walgreens Boots Alliance and Walmart are also said to be on the hook for billions if a deal is reached.

Iran to attack Saudis? Saudi Arabia and the U.S. have shared information indicating Iran may attack the kingdom or other countries in the region sometime soon, leading the two nations to adjust their military posture, reports note. Reports described the possible attacks as an effort to distract from nationwide protests that have roiled Iran in recent weeks. Link to WSJ article.

North Korea fired at least 23 ballistic missiles today including one that was the first to fly over a nautical border with South Korea. The biggest daily barrage under Kim Jong Un comes a day after Pyongyang threatened to take “powerful measures” if the U.S. doesn’t halt military drills with partners including South Korea. Seoul responded by firing three air-to-surface rockets into international waters on North Korea’s side of the sea border.

Jair Bolsonaro vowed to respect Brazil’s constitution and authorized the gov’t to start the political transition after his election loss to Luiz Inácio Lula da Silva. While stopping short of formally conceding defeat, the brief remarks by the president almost 48 hours after the vote were seen by investors, analysts and the courts alike as enough of a gesture to lay to rest lingering concerns that he might contest the result. Protests against the election result yesterday blocked roads and threatened to upend the country’s massive agriculture industry.

Benjamin Netanyahu may yet return to power. Interim results from Israel’s election show his Likud party on a path to forming a majority in Parliament. That could propel Netanyahu back to the prime minister position, even as he stands trial on corruption charges — though pollsters said it was too early to call the election.

Midterm election updates below include:

• White Suburban women swing toward GOP, WSJ poll finds.
• Wasserman’s House rating changes: 10 more blue districts move in GOP’s direction.
• Republicans surging in Florida.
• Libertarian drops out of Arizona Senate race, endorses GOP candidate Masters.
  

Election Day 2022 is 6 days away. Election Day 2024 is 734 days away.

Equities today: Global stock markets were mixed overnight. U.S. Dow opened around 90 points lower. Focus today is on the FOMC statement this afternoon and remarks by Fair Chair Jerome Powell at his presser. In Asia, Japan -0.1%. Hong Kong +2.4%. China +1.2%. India -0.4%. In Europe, at midday, London -0.1%. Paris +0.3%. Frankfurt flat.

U.S. equities yesterday: The Dow ended down 79.75 points, 0.24%, at 32,653.20. The Nasdaq declined 97.30 points, 0.89%, at 10,890.85. The S&P 500 lost 15.88 points, 0.41%, at 3,856.10.

Just about all of Amazon’s pandemic gains are gone. The e-commerce and cloud computing giant suffered its fifth straight losing day in markets Tuesday, falling to its lowest point since April 2020. It also fell below $1 trillion in market value. The stock is down nearly 42% so far this year, as the tech titan tries to come to grips with the fact that consumers aren’t spending as much money on stuff as they did during the earlier days of the pandemic.

Agriculture markets yesterday:

• Corn: December corn futures rose 6 1/4 cents to $6.97 3/4, the contract’s highest closing price since Oct. 13.
• Soy complex: January soybeans surged 28 1/4 cents to $14.47 3/4, the highest close since Sept. 22. December soyoil gained 16 points to 73.37 cents. December soymeal slid $3.30 to $424.80.
• Wheat: December SRW wheat rose 20 1/4 cents to $9.02 1/2, the contract’s highest close since Oct. 10. December HRW wheat rose 11 1/4 cents to $9.90. December spring wheat rose 8 1/2 cents to $9.89 3/4.
• Cotton: December cotton rose the 300-point initial daily limit to 75.00 cents. The limit expands to 400 points Wednesday.
• Cattle: December live cattle fell 52.5 cents to $151.95, the contract’s lowest close since Oct. 20. January feeder cattle fell $1.25 to $178.20.
• Hogs: December lean hogs rose 27.5 cents to $85.20. The CME lean hog index rose 2 cents to $93.79, the first gain in four days. Today’s index is expected to fall 4 cents.
  

Ag markets today: Wheat futures led a sharp drop in prices early this morning as news of Russia resuming its participation in the Black Sea grain export initiative hit markets. As of 7:30 a.m. ET, SRW wheat futures were trading mostly 47 to 52 cents lower, HRW wheat was 38 to 41 cents lower, HRS wheat was 30 to 34 cents lower, corn futures were 13 to 15 cents lower and soybeans were 8 to 14 cents lower. Front-month crude oil futures were holding near unchanged and the U.S. dollar index was around 200 points lower this morning.

Technical viewpoints from Jim Wyckoff:

On tap today:

• ADP’s employment report is expected to show that the U.S. private sector added 195,000 jobs in October. (8:15 a.m. ET) UPDATE: Private businesses in the U.S. unexpectedly created 239,000 jobs in October of 2022, the most in three months, and compared to market forecasts of 195,000. The hiring was not broad-based with the services-providing sector creating 247,000 jobs, led by leisure/hospitality (210,000) and trade/transportation/utilities (84,000). Jobs were lost in information (-17,000); professional/business (-14,000); financial activities (-10,000); education/health (-5,000). Also, the goods sector shed 8,000 jobs, mainly due to manufacturing (-20,000). “Goods producers, which are sensitive to interest rates, are pulling back, and job changers are commanding smaller pay gains. While we’re seeing early signs of Fed-driven demand destruction, it’s affecting only certain sectors of the labor market” said Nela Richardson, ADP chief economist. Meanwhile, the annual pay growth remained nearly the same for job starters (7.7%) and slowed slightly for job changers (15.2%).
• Federal Reserve releases a policy statement at 2 p.m. ET and Chairman Jerome Powell holds a press conference at 2:30 p.m. ET.

Fed widely expected to boost rates another 75 basis points; forward guidance key focus. The announcement from the Federal Open Market Committee (FOMC) meeting comes at 2 pm ET, and a 75-basis points hike would put the Fed funds rate at 3.75% to 4%, the highest mark since 2008. CME Fed funds futures put the probabilities at 87.5% for a 75-basis-point hike prior to economic updates Wednesday morning, with 12.5% probabilities for a 50-basis-point boost.

For December, CME Fed funds futures indicate odds for a 75-basis-point hike of 50.3%, while a 50-basis-point increase is given 44.4% odds.

Focus will be on the forward guidance from the Fed and how Fed Chairman Jerome Powell presents situation in his post-meeting presser. “Certainly yanking/modifying ‘ongoing increases’ from the statement would be the first clue” that the Fed sees smaller increases in the future, Tom Porcelli, a chief economist at RBC Capital Markets, wrote in a research note.

A look at Powell’s remarks during September presser: “At some point as the stance of policy tightens, it will be appropriate to slow the pace of increases while we assess how our policy adjustments affect the economy,” he said. But he cautioned the Fed expects they will need to “bring our funds rate to a restrictive level and to keep it there for some time.” Also from September on whether there be a 50- or 75-basis-point hike in November: “We make one decision per meeting,” he commented. “This meeting, we decided to raise the rate by 75 [basis points].”

A letter to Powell. Democratic Sens. Elizabeth Warren (Mass.), and Sheldon Whitehouse (R.I.) — along with Sen. Bernie Sanders (I-Vt.) — asked Fed Chair Jerome Powell in a letter about the implications of the Federal Reserve’s most recent economic projections and its intention to continue raising interest rates at an “alarming pace.”

Note this for the long run: Derivatives markets show the federal-funds rate sitting at around 3.5% for the long run. That is a full percentage point higher than the central bank’s own latest forecast. A long period of higher rates could upend markets, which have been rebounding in recent weeks, partly because of hopes that the Fed will pursue a less-aggressive course.

Investors will watch the Bank of England tomorrow, when it convenes its first rate-setting meeting since Rishi Sunak became Britain’s prime minister. Like the Fed, the Bank of England is expected to raise rates by 0.75 percentage points, the biggest increase in 30 years, to bring down torrid inflation and maintain a sense of calm in the markets for British government bonds and the pound.

U.S. banks spent $1 billion on ransomware payments last year. U.S. financial institutions spent nearly $1.2 billion on likely ransomware-related payments last year, most commonly in response to breaches originating with Russian criminal groups, according to the Treasury Department. The payments more than doubled from 2020, underscoring the pernicious damage that ransomware continues to wreak on the private sector. The Financial Crimes Enforcement Network, or FinCEN, said its analysis “indicates that ransomware continues to pose a significant threat to U.S. critical infrastructure sectors, businesses and the public.”

United Airlines pilots reject tentative contract agreement. United Airlines pilots said a new labor agreement with the carrier falls short of the “industry-leading contract United pilots have earned and deserve.” The Air Line Pilots Association, which represents about 14,000 pilots, plans to organize informational picketing across the airline’s network in response to what it says is United’s “wait and see approach” to negotiations.

Eurozone manufacturing sector weakens further in October. S&P Global’s final eurozone manufacturing purchasing managers index (PMI) fell to a 29-month low of 46.4 in October, below market expectations and the preliminary reading. An index measuring output dropped to 43.8, marking the fifth straight monthly contraction.

Market perspectives:

• Outside markets: The U.S. dollar index was weaker amid a mixed tone in global currencies versus the greenback. The yield on the 10-year US Treasury note was slightly weaker, trading around 4.03%. Crude oil futures saw modest gain, with U.S. crude around $88.40 per barrel and Brent around $94.70 per barrel. Gold and silver futures were higher, with gold around $1,658 per troy ounce and silver around $19.80 per troy ounce.

• Fertilizer output rises. With natural gas prices falling sharply, commodity research firm CRU International estimates fertilizer output is now at about 63% of total capacity from a low of around 37% at the start of October. Still, gas prices remain higher than before Russia’s invasion of Ukraine, which threatens to limit production for some time to come.

• Shipping: ‘Dark clouds on the horizon.’ A.P. Moeller-Maersk, one of the world’s biggest shipping companies, is out with its quarterly earnings, which are widely seen as a barometer for global trade and the supply chain. The Danish firm controls about one-sixth of the world’s container shipping industry, with offices across 130 countries and more than 100K employees worldwide. Earnings before interest, tax, depreciation and amortization (EBITDA) soared 60% Y/Y to $10.9 billion, coming in above consensus estimates of $9.8 billion. The “exceptional results” were driven by significantly higher ocean freight rates, as well as shipments on routes from Asia to Europe and to North America. Shares of Maersk still tumbled nearly 5% in Copenhagen as worries over shipping rates and volumes sunk the shipper’s outlook.

“It is clear that freight rates have peaked and started to normalize during the quarter, driven by both decreasing demand and easing of supply chain congestion. As anticipated all year, earnings in Ocean will come down in the coming periods,” CEO Søren Skou said in a statement. Global container demand is estimated to contract between 2% and 4% in 2022, down from a previous projection of +1% to -1%, though Maersk confirmed full-year guidance for underlying EBITDA of around $37 billion and a free cash flow above $24 billion.

Additional worries: “With the war in Ukraine, an energy crisis in Europe, high inflation, and a looming global recession there are plenty of dark clouds on the horizon. This weighs on consumer purchasing power which in turn impacts global transportation and logistics demand. While we expect a slow-down of the global economy to lead to a softer market in Ocean, we will continue to pursue the growth opportunities within our Logistics business. As a trusted partner, we are ready to support our customers in rethinking their supply chain needs through what is likely to be a period of a more volatile business environment.”

• Pakistan: Islamabad approves import of 300,000 tons wheat from Russia. Pakistan’s government approved a deal to import 300,000 tons of Russian wheat from November 2022 to January 2023, Al Jazeera reported. Prodintorg, a Russian state-owned corporation that is not included in Western sanctions, will supply the wheat. Islamabad hopes the deal will help build domestic stocks even as food inflation rises above 30% year-on-year. September’s devastating floods harmed Pakistan’s wheat output, which was already projected to be lower than usual this year.

• Reuters: Argentina to announce allowing exporters to delay wheat shipments. Drought conditions in Argentina have the gov’t set to announce it will allow wheat exporters to delay agreed-upon shipments of wheat, Reuters reported, saying the decision could be announced within days. A source from the grains exporting chamber (CEC) said the measures would include allowing rescheduling of wheat exports without the normal 15% fine. The Argentine gov’t met with wheat millers and exporters in October to discuss the drought situation. Some fear the action could further cause impacts on the global wheat market as it follows a drought-hit U.S. crop and disruptions caused by the Russian war in Ukraine.

• Ag trade: Jordan tendered to buy 120,000 MT of optional origin milling wheat.

• NWS weather: Heavy snow today along the Cascades, Sierra Nevada, and portions of the northern Rockies... ...Heavy mountain snow moving into the central Rockies possibly spreading into the central/northern High Plains on Thursday into early Friday... ...Much colder across the western U.S. but very warm today across much of the northern/central Plains.

Items in Pro Farmer’s First Thing Today include:

• Heavy price pressure this morning
• Russia resumes participation in Black Sea grain deal (details in Russia/Ukraine section)
• China tries to ease mounting economic concerns (details in China section)
• China to sell more wheat reserves
• December live cattle hold no premium
• Pork cutout under $100

— Summary: Russian generals have had high-level discussions about using tactical nuclear weapons in Ukraine, U.S. intelligence shows. The conversations alarmed the Biden administration because they showed how frustrated Moscow had become over its battlefield setbacks in Ukraine. Link for more via the New York Times. Meanwhile power and water were restored in Kyiv, the capital, following Russian strikes. The boss of Ukrenergo, the country’s energy supplier, warned that Russia wanted to create “a humanitarian catastrophe” this winter. Finally, Ukraine’s Air Force said it has no effective defense against the types of ballistic missiles that Iran is preparing to ship to Russia to use in its war in Ukraine. Western officials say Iran is working to send approximately 1,000 additional weapons, including short-range ballistic missiles and more attack drones, which could give the Kremlin a substantial boost on the battlefield. This expected shipment would mark a significant increase in Iranian support for Russia’s war effort.

• Russia has returned to the U.N. brokered deal to ship Ukrainian grain out of the country. Russia’s previous move to indefinitely suspend participation over the weekend caused a spike in global wheat prices and raised fresh concerns over food shortages. “Based on our conversation with Putin yesterday, Russian Defense Minister Sergei Shoigu called our National Defense Minister Hulusi Akar today to say that as of 12:00 p.m. today the exports of grain will continue as they had,” said Turkish President Recep Tayyip Erdogan at a meeting of ruling party lawmakers in Ankara, referring to a call he had yesterday with Russian President Vladimir Putin.

  Russia comments. In a statement, Russia’s Defense Ministry said it had agreed to renew its participation in the grain deal after the U.N. and Turkey secured written assurances from Ukraine that shipping corridors would not be used for military purposes. “The Russian Federation considers that the guarantees received at the moment appear sufficient, and resumes the implementation of the agreement,” the defense ministry said in a statement.

  U.S. comments. U.S. Ambassador to the U.N. Linda Thomas-Greenfield told CNN the U.S. is “delighted” to hear Russia is rejoining the Black Sea grain deal, noting that Russia was “convinced” the deal needed to continue. “They can’t stand in the way of feeding the entire world,” she remarked.

  The agreement between Russian and Ukraine expires on Nov. 19, and discussions with the parties and Turkey and the U.N. to extend the agreement have continued throughout Russia’s short-lived decision to suspend the deal.

• Volodymyr Zelenskyy, Ukraine’s president, called for a “reliable and long-term defense” for grain exports from Ukrainian ports on the Black Sea. Three ships departed on Tuesday.
• One in five Russian conscripts drafted to fight in Ukraine died before reaching the front lines, the independent Novaya Gazeta Europa reported. Kyiv estimates that some 73,000 Russian troops have been killed in Ukraine, though the Washington Post could not independently verify that number. Russian officials recently claimed that around 6,000 Russian soldiers had died so far in the conflict. U.S. officials have cited heavy Russian losses but estimate about half as many deaths as the Ukrainian figure.
  

— Growing concern over Jones Act waivers. Sen. Roger Wicker (R-Miss.) is criticizing the Biden administration’s recent Jones Act waivers granted for shipments to Puerto Rico. “I urge you to consider the implications of unnecessary waivers, abide by the law, and put the domestic maritime industry ahead of foreign competition,” Wicker wrote in a recent letter (link) to Homeland Security Secretary Alejandro Mayorkas. Bipartisan leaders of the House Transportation and Infrastructure Committee expressed similar concerns in a recent letter to Mayorkas and Transportation Secretary Pete Buttigieg.

— Covid disruptions and extreme weather this summer dragged on growth for several of China’s popular tourist spots and factory hubs, underscoring the economy’s fragility. At least eight provincial-level jurisdictions reported slower growth or flipped into contraction in the first nine months of 2022 compared to the first half. Meanwhile, China ordered a seven-day lockdown of the area around Foxconn Technology Group’s main plant in Zhengzhou after a jump in Covid-19 cases, a move that will severely curtail shipments in and out of the world’s largest iPhone factory.

— China tries to ease mounting economic concerns. Chinese policymakers pledged on Wednesday that growth was still a priority, and they would press on with reforms, in an apparent bid to soothe fears that ideology could take precedence as Xi Jinping began a new leadership term. Strict Covid-19 lockdowns are weighing heavily on China’s business activity, consumer confidence and financial markets. In pre-recorded interviews for the Global Financial Leaders’ Investment Summit in Hong Kong, senior officials from China’s central bank, securities and banking regulators assured their audience Beijing would keep its currency and property markets stable, and remained committed to a pro-growth economic strategy. Yi Gang, governor of the People’s Bank of China, said: “The Chinese economy has remained broadly on track despite some challenges and downward pressure.”

— Shore enough. U.S. companies are acknowledging that reshoring is accelerating, with at least one executive being “pumped up” about critical supply lines shifting away from nations such as China. A new Deloitte survey shows said some 62% of manufacturers it surveyed have started reshoring or near-shoring their production capacities.

Meanwhile, the Mexican state of Chihuahua is looking to attract investment by chipmaker Intel and other semiconductor companies as it seeks to move up the manufacturing value chain and benefit from proximity to the U.S.

— Former chief ag negotiator at USTR concerned over Mexico GMO corn decree. The decree by Mexican President Andrés Manuel López Obrador that would halt imports of GMO corn in 2024 is one issue where the Mexican leader has “dug in,” according to Gregg Doud, chief agricultural trade negotiator at the Office of the US Trade Representative (USTR) in the Trump administration and now chief economist at Aimpoint Research. “We’re going to have to really bear down on Mexico and work through this and it’s a very high priority topic between the U.S. and Mexico and agriculture,” Doud said.

Mexican officials have given conflicting signals on whether the coming ban would apply to corn imported for feed or only to corn imported for food use. USDA Secretary Tom Vilsack has said he expects the situation to become clearer in 2023. But U.S. corn industry lobbyists are pressing the administration to take action via the U.S.-Mexico-Canada Agreement (USMCA) over the matter, something which the administration has not yet signaled it will do.

Meanwhile, Mary Kay Thatcher with Syngenta says if Mexico’s ban on GM corn and crop protection products like glyphosate are implemented, it sets precedent for the future, Brownfield Ag News reports. “Are they going to quit with GMO corn? No. If they get that done, I think soybeans are next. Are they going to quit with glyphosate? No, they’ll pick some other pesticide, be it atrazine, be it chlorpyrifos, whatever it may be.” Thatcher says it’s become a personal issue for Mexico’s President and “Nothing short of the President of the United States going to the President of Mexico and raising this as an issue is going to work. So, we pushed Mr. Trump to do it, it never happened, we’ve pushed Mr. Biden to do it, it never happened. It has got to be raised to the point where this President will decide he’s willing to use some chips and go to the President of Mexico and say, ‘This has to stop’.”

— USDA chief economist: ‘Pretty flat’ outlook for farm exports in 2023. After reaching a record high in 2022, U.S. farm exports will plateau amid a world of uncertainties, said the USDA chief economist on Tuesday. The strong dollar and slower economic growth worldwide will be a drag on exports, now forecast by USDA at $193.5 billion this fiscal year, down slightly from the estimated record of $196 billion in the fiscal year that ended on Sept. 30. “We’ve seen pretty good strength and see our trading partners hang in there as trade value has grown,” said USDA chief economist Seth Meyer, speaking on a panel at the Farm Foundation forum. “And (we’re) looking again at a pretty flat trade picture in the coming year. I wouldn’t get too hung up on what the exact number is yet. We’ve got a long way to go.” Link to a video recording of the forum.

— Wind break. Plans for massive offshore wind farms that President Joe Biden hopes will power as many as 10 million American homes by 2030 are starting to falter. Meanwhile, as many as 40 U.S. coal-fired power plants that were slated to shut will run for longer than expected.

— Vilsack announces $223 million in grant, loans for meat, poultry processing. As expected, USDA Secretary Tom Vilsack today in Omaha, Neb. will announce $223 million in taxpayer grants and loans to expand meat and poultry processing capacity and to address supply chain problems. Details:

• Projects are divided among $73 million in 21 grants through the first round of the Meat and Poultry Processing Expansion Program (MPPEP), $75 million for eight projects through the Meat and Poultry Intermediary Lending Program, and $75 million for four meat and poultry-related projects through the Food Supply Chain Guaranteed Loan program.
• Vilsack said the funding “will open new opportunities for cattle producers by expanding their beef processing capacity by 700 head per day. The project will also support an additional 275 jobs.”
• USDA received 300 applications for the programs, with 40 reviewed.
• Vilsack was asked about some community objections to meat and poultry plants, about environmental considerations, and the availability of labor. He said part of the evaluation criteria considered was community impact and support and that there had been an environmental analysis as part of the review. Applicants had to attest that they would create good paying jobs and that they believe they can find the workers for the plants. Vilsack said most of the plants would be small and therefore not have to deal with the labor shortages that big plants have had to endure.
• Asked whether big meat and poultry companies would buy up small plants, Vilsack and Karama Neal, the administrator for the Rural Business-Cooperative Service, a division of the Rural Development mission area, who oversees the program, said that if the plants are to be sold, USDA must be notified, and that USDA would attempt to provide additional financing if that were needed. Vilsack said USDA has no plans to buy any of the plants.
• More to come: Tuesday’s announcement was the first round of funding made available through Phase I of MPEPP, USDA said. Additional announcements are coming. USDA will also begin taking applications for a new phase to deploy an additional $225 million, for a total of up to $375 million, to provide gap financing for independent processing plant projects that fill a demonstrated need for more diversified processing capacity.
• Objective of the Meat and Poultry Intermediary Lending Program (MPILP) is to provide grant funding to nonprofit intermediary lenders who finance — or plan to finance — the start-up, expansion, or operation of slaughter, or other processing of meat and poultry. In the first round of MPILP, $75 million was awarded to eight lenders in seven states. Applications for the second cycle ($125 million) are being accepted and are due Dec. 31.
• Via the Food Supply Chain Guaranteed Loan program (FSCGLP), USDA partners with lenders to guarantee loans to help eligible entities expand meat and poultry processing capacity and strengthen the U.S. food supply chain. Lenders provide the loans to eligible cooperatives, corporations, for profits, nonprofits, Tribal communities, public bodies and people in rural and urban areas. Since FSCGLP was launched in December 2021, more than $250 million in loans have been guaranteed for projects in the middle of the food supply chain, USDA said. Four of these, announced Tuesday and totaling more than $75 million, are for meat and poultry processing businesses.
• Links: White House fact sheet | Meat and Poultry Processing Expansion Program | USDA fact sheet | Food Systems Transformation Chart

— Summary:

• Global Covid-19 cases at 631,030,679 with 6,593,290 deaths.
• U.S. case count is at 97,533,235 with 1,070,818 deaths.
• Johns Hopkins University Coronavirus Resource Center says there have been 636,871,557 doses administered, 266,031,472 have received at least one vaccine, or 80.74% of the U.S. population.

— Pfizer says it will seek FDA approval this year for a vaccine to prevent respiratory syncytial virus, or RSV. The virus typically causes mild, cold-like symptoms, but it can cause serious illness, particularly in older adults and infants. Pfizer’s vaccine candidate is administered to pregnant women who then make antibodies that can protect the baby after birth. In the trial, the vaccine appeared to be about 80% effective at preventing severe RSV disease in infants during the first three months of life. If approved, Pfizer’s shot will be the first against RSV and the first new product related to the infection in over two decades. Worldwide, RSV causes about 33 million infections in children under the age of 5 and hospitalizes 3.6 million annually.

— CVS, Walgreens and Walmart have tentatively agreed to pay more than $12 billion to resolve thousands of state and local government lawsuits accusing the chains of mishandling opioid painkillers, according to people familiar with the matter.

— Wasserman’s House rating changes: 10 more blue districts move in GOP’s direction. Dave Wasserman, House editor for the Cook Political Report with Amy Walter, says the group has shifted ten more districts in deep-blue states in Republicans’ direction — including Rep. Katie Porter (CA-47) and two open seats on Long Island from Lean Democrat to Toss Up. “Our best estimate remains a GOP gain of 12 to 25 House seats, though with 35 seats in our Toss Up column, there’s still a wide range of possible outcomes.” Link for more.

The Democrats currently control 220 seats while the GOP controls 212 seats, and three seats remain vacant until the November general election.

— Republicans surging in Florida. CNN reports (link): “Most election years, a visit by a high-profile politician to the Sunshine State would be the norm, if not expected,” and “four years ago, races for governor and U.S. Senate in Florida were decided in a recount. But now, Republicans and Democrats are on opposite trajectories. Republicans believe they are headed for their most successful election night in a generation, buoyed by DeSantis’ record-breaking fundraising and a surge of enthusiasm. Democrats, trailing in the polls and lagging in excitement, are hoping for an unexpected change of political winds or they could be left without a single statewide elected official in Florida for the first time since at least Reconstruction.”

— Libertarian drops out of Arizona Senate race, endorses GOP candidate Masters. Arizona Libertarian Senate candidate Marc Victor dropped out of the race Tuesday and urged his supporters to vote for Republican Blake Masters. Victor’s endorsement came after overtures to Victor from Masters’ campaign aides and after Masters persuaded Victor in a Zoom conversation to back him. Victor said in a video, “While we don’t see eye to eye on everything, I feel very confident after that conversation that Blake Masters is going to do everything he possibly can to further the interests of the Live and Let Live Global Peace Movement,” Victor said.

A Fox News poll conducted jointly by Beacon Research (D) and Shaw & Company (R) of 1,003 Arizona voters taken Oct. 26-30 shows Sen. Mark Kelly (D) leading challenger Masters 47%-45%. The “race has tightened since August and September when Kelly was up 8 and 6 points, respectively.”

— White suburban women, who make up 20% of the electorate, have moved 27 percentage points away from Democrats since WSJ’s August poll because of rising concerns over the economy and inflation. The new survey (link) suggests that the topic of abortion rights has faded in importance, while the voting group expressed more negative views toward the state of the country and President Biden’s leadership than in the August survey.

— White House: Biden to speak next Tuesday. White House Press Secretary Karine Jean-Pierre told reporters on Tuesday that President Biden will deliver remarks of some kind after voting stops next week. Asked if Biden will “host a news conference following the midterms, as some of his predecessors have done,” Jean-Pierre “did not say whether Biden would take questions.” But she did say, “I am very sure…that you will be hearing from the president…Tuesday after the elections.”

— Brazil: In his first public statement since losing Brazil’s presidential election, Jair Bolsonaro made no mention of his defeat to Luiz Inácio Lula da Silva, though afterwards an aide said Bolsonaro’s government would comply with the transfer of power. Bolsonaro said those protesting in his support were expressing “injustice” about the vote. But he made no allegations of voter fraud and instructed his supporters to avoid “invading property.”

— Israel: Binyamin Netanyahu said his party was on the “brink of a very big victory” in Israel’s general election. With roughly 85% of the votes counted, the former prime minister’s right-wing bloc looks set to form a majority government, toppling the coalition led by Yair Lapid. Netanyahu was forced from office in 2021 amid accusations of corruption.

— Capitol Police said it would seek further resources to protect lawmakers after the attack on Nancy Pelosi’s husband. U.S. Capitol Police Chief Tom Manger said the department has conducted a review of security since Friday when David DePape allegedly broke into the Pelosi residence and beat Pelosi with a hammer. DePape pleaded not guilty to charges including attempted murder, assault with a deadly weapon, and elder abuse on Tuesday, and he was ordered held without bail pending a court date Friday.

Meanwhile, security cameras installed at House Speaker Nancy Pelosi’s San Francisco home captured the break-in before her husband was attacked by a hammer-wielding man, but U.S. Capitol Police officers weren’t actively monitoring them at the time.

— Some student loan borrowers are starting to receive refund checks from the government, even as President Biden’s forgiveness plan is tied up in court. The government is sending money to borrowers who paid down their student loans after the pandemic pause took effect in March 2020, when interest rates fell to zero and payments were suspended.

— A North Korean missile landed 60km (37.3 miles) from South Korea’s coast, the first such launch to cross the countries’ maritime border. Yoon Suk-yeol, South Korea’s president, called it an “effective territorial invasion” and promised a “swift response.” South Korea said at least ten missiles were fired “east and west” on Wednesday morning. It responded by lobbing three missiles towards North Korea.

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