Supreme Court announces timelines on WOTUS, Proposition 12 cases
In Today’s Digital Newspaper |
The Federal Reserve is expected to hike rates by 75 basis points today. That’s as inflation in the U.S. hits a 40-year high (and consumer sentiment drops). Before Monday, virtually all bets were on the Fed raising interest rates by half a percentage point today at the end of a regular rate-setting meeting. Suddenly, the table has slanted in a more hawkish direction: markets have now priced in a three-quarter-point increase. “The Fed has the tools that it needs, and we are giving them the space that it needs to operate,” National Economic Council Director Brian Deese said last week.
The European Central Bank’s Governing Council held a surprise meeting today amid investor concern about whether it can juggle raising rates with keeping bond yields in check. Italian government bond yields surged above 4% and the difference between German yields and others widened. The confab comes just six days after the ECB said that it would raise interest rates in July. The central bank for 19 European countries said it is working on a tool to reduce the spreads between diverging yields but has yet to give any details on it. The euro rose on the news, climbing as much as 0.6% to $1.0480. The ECB’s next scheduled policy meeting isn’t until July 27. The Stoxx Europe 600 index jumped more than 1%, ending a six-day losing streak, while the region’s bonds advanced as the European Central Bank’s Governing Council convened an emergency meeting. The rally faded somewhat, however, after the central bank released a post-meeting statement that was short on immediate action. The euro erased most of its gain against the dollar.
Retail spending fell 0.3% in May, the Commerce Department said this morning, amid high inflation, rising interest rates and weakening consumer confidence.
Last week, the average 30-year fixed-rate mortgage increased to 5.65%. And now this week, the 30-year mortgage hit 6.28% on Tuesday, according to a daily measure from Mortgage News Daily. After reaching record lows around 2.7% in late 2020, it started 2022 at 3.29%.
Private exporters reported the cancellation of sales of 100,000 metric tons of soybeans for delivery to unknown destinations during the 2021-2022 marketing year.
Bloomberg reports that some Biden administration officials are privately concerned that U.S. and European sanctions on Russia are exacerbating inflation, worsening food insecurity and punishing ordinary Russians rather than pressuring President Vladimir Putin or his allies.
Russia demanded the surrender of Ukrainian forces fighting to defend Severodonetsk. The governor of Luhansk, the region containing Severodonetsk, said it was getting “harder” to defend the city, which Russia now controls 80% of. Evacuations of civilians sheltering in the Azot chemical factory are underway.
The U.S. expects more announcements of weapons and equipment packages to be sent to Ukraine to help in its fight against Russia at a meeting of nearly 50 countries in Brussels today, according to a senior U.S. defense official.
Ukraine’s farm industry has lost $4.3 billion from war damage to farmland, machinery and livestock due to Russia’s invasion, according to the Kyiv School of Economics.
President Biden said the U.S. will build temporary silos on Poland’s border with Ukraine to facilitate grain exports and address surging food prices amid Russia’s invasion. Details in Russia/Ukraine section.
President Biden is closing in on a decision to lift some tariffs on Chinese imports.
The South Korean government reached a deal with truckers to extend a minimum-wage plan, ending a weeklong strike that had snarled supply chains in one of Asia’s export powerhouses. Meanwhile, the two sides in the West Coast port labor talks issued a joint statement saying neither side “is preparing for a strike or lockout.”
Caterpillar is moving its headquarters to Texas from its longtime Illinois base, saying the move would help it grow and that the company isn’t getting any economic or tax incentives related to the shift.
Supreme Court announces timelines on WOTUS, Proposition 12 cases. Details below.
The House on Tuesday overwhelmingly approved legislation that would extend police protection to the immediate families of Supreme Court justices, clearing the bill for President Biden at a time of rising concern about threats to justices as a potentially momentous abortion ruling looms. The vote was 396 to 27, with all of the opposition coming from Democrats, who tried unsuccessfully to extend the protections to the families of court employees. The action sent the measure to President Biden for his signature.”
Primary elections were held in Nevada, South Carolina, Maine and North Dakota on Tuesday. Meanwhile, a GOP candidate won a special House election. Details in Politics section.
Election Day 2022 is 146 days away. Election Day 2024 is 874 days away.
MARKET FOCUS |
Equities today: Global stock markets were mixed overnight. U.S. stock indexes are pointed toward firmer openings. Traders await results from today’s FOMC meeting and Fed Chairman Jerome Powell’s presser… and an emergency meeting of the European Central Bank. The Stoxx Europe 600 index jumped more than 1%, ending a six-day losing streak, while the region’s bonds advanced as the European Central Bank’s Governing Council convened an emergency meeting. The rally faded somewhat, however, after the central bank released a post-meeting statement that was short on immediate action. The euro erased most of its gain against the dollar.
U.S. equities yesterday: The Dow closed down 151.91 points, 0.50%, at 30,364.83. The Nasdaq rose 19.12 points, 0.18%, at 10,828.35. The S&P 500 declined 14.15 points, 0.38%, at 3,735.48.
Agriculture markets yesterday:
- Corn: July corn fell 1 cent to $7.68 1/4, while December corn fell 1/4 cent to $7.21 1/4.
- Soy complex: July soybeans fell 9 cents to $16.98 1/2, the contract’s lowest closing price since June 3, while November futures fell 8 1/2 cents to $15.25 1/4. July soymeal sank $4.10 to $411.00 and July soyoil fell 123 points to 78.28 cents.
- Wheat: July SRW wheat fell 20 3/4 cents to $10.50 1/4, the contract’s lowest closing price since June 3. July HRW wheat fell 19 1/2 cents to $11.42 1/4. July spring wheat fell 13 1/4 cents to $12.08 1/2.
- Cotton: July cotton fell 218 points to 143.48 cents per pound, while December fell 216 points to 120.65 cents.
- Cattle: August live cattle rose 20 cents to $134.075. August feeders slipped 2.5 cents to $171.30.
- Hogs: June lean hogs expired today at $108.45, up 45 cents. July hogs fell 5 cents to $106.625. While the CME lean hog index for Wednesday (as of June 13) was projected to rise 73 cents to $108.13, pork cutout values sank $2.23 early Tuesday to $109.15.
Ag markets today: Corn and wheat futures extended Tuesday’s losses overnight, while the soybean market traded mixed. As of 7:30 a.m. ET, corn futures were trading mostly 2 to 3 cents lower, soybeans were 4 cents lower to 3 cents higher, SRW wheat futures were 2 to 3 cents lower, HRW wheat futures were 5 to 8 cents lower and spring wheat was 10 to 13 cents lower. Front-month U.S. crude oil futures were around 65 cents lower and the U.S. dollar index was down more than 700 points this morning.
Technical viewpoints from Jim Wyckoff:
On tap today:
• Canada housing starts are forecast at a seasonally adjusted annualized rate of 255,000 units in May, down from 267,330 in April (8:15 a.m. ET)
• U.S. retail sales are expected to rise 0.1% in May from the previous month, after rising 0.9% in April. (8:30 a.m. ET) UPDATE: Retail spending fell 0.3% in May, the Commerce Department said Wednesday, amid high inflation, rising interest rates and weakening consumer confidence.
• U.S. import prices are forecast to rise 1% in May following a flat reading in April. (8:30 a.m. ET)
• U.S. total inventories are expected to rise 1.2% in April, following a 2% rise in March. (8:30 a.m. ET)
• EIA will release its weekly petroleum status report at 10:30 a.m. ET.
• Federal Reserve will release a policy statement and new economic projections at 2 p.m. ET followed by Chairman Jerome Powell’s press conference at 2:30 p.m. ET.
• Rep. G.T. Thompson and Republicans hold a press conference on inflation, where House Republicans are expected to roll out a plan to battle inflation. 2 p.m. ET.
• House Ag Appropriations Subcommittee will hold a markup to consider funding for the USDA, FDA and related agencies for FY 2023. 2:30 p.m. ET.
Key day for Federal Reserve. Investors now believe the Fed today will hike rates by 75 basis points, following the unexpected acceleration in CPI and inflation expectations in May and media reports suggesting the option was being discussed by policymakers. The updated set of Fed projections — in particular the dot plots —will be key in driving the market reaction, says ING Economics. Federal Reserve Chairman Jerome Powell’s presser will also be key in signaling future rate hikes.
“The Fed is suggesting that they are willing to induce a recession to prevent the inflation surge,” says Gene Goldman, chief investment officer of Cetera Investment Management. “The CPI and PPI reports will make the Fed raise rates more than markets had anticipated just last week [75 basis points instead of 50]. This is analogous to the Fed ripping off the band-aid and raising rates fast upfront (instead of slowly pulling it off).” Goldman adds, however, that the key thing to watch is the terminal rate — while the Fed might get more aggressive now, it also might end up raising rates by less later in the rate-hiking cycle.
Bottom line: The Fed will note continued inflation reports amid the fastest 5-day increase in the 2-year Treasury yield since the mid-1980s. The Fed is planning to hike further and faster than almost anyone else. That increases the relative returns on dollar investments, leading the U.S. currency to strengthen. The dollar index — a measure against a basket of other currencies — has gained almost 17% in the past year.
European Central Bank (ECB) announces emergency meeting to discuss bond market turmoil. A measure known as Europe’s fear gauge has hit its highest level since early 2020. The ECB’s decision to meet today also comes just hours ahead of a rate decision by the U.S. Federal Reserve. Bond yields have come down and the euro moved higher against the U.S. dollar. The ECB meeting announcement also followed a speech by one of the members of the central bank that looked to address some of the recent market fears over financial fragmentation. The unscheduled meeting is raising the prospect the ECB could announce a new tool to tackle surging borrowing costs in weaker eurozone economies.
Mortgage rates hit 6%+ as housing market hits a wall... Mortgage rates have doubled since the start of the year, with lender Rocket Mortgage quoting a 6.25% interest rate for 30-year fixed-rate mortgages for new home purchases. Higher borrowing costs could further stretch housing affordability, push more buyers to the sidelines, and cool off the heated housing market. The National Association of Home Builders’ Housing Market Index, which gauges builders’ confidence in market conditions, will release its number for June later this morning. Analysts expect a reading of 68, down from 69 for May.
…But Americans have more equity in their homes than ever. Total U.S. home equity increased almost 20% in the first quarter to $27.8 trillion, a record high, according to the Federal Reserve.
Caterpillar is latest manufacturer moving to Texas. Caterpillar is moving its headquarters from Chicago, Illinois, to Irving, Texas —a suburb of Dallas — following the footsteps of other major manufacturers that have relocated over the past year. The producer of the yellow construction and mining equipment said the move is “in the best strategic interest of the company.” The move is a blow to Illinois, home to the manufacturing giant — with more than 107,000 employees globally — for nearly a century. Caterpillar was based in Peoria for many decades before shifting its headquarters to Deerfield, a Chicago suburb, in 2018.
Virginia is another popular destination. Aerospace defense giants Boeing and Raytheon Technologies both announced plans recently to move headquarters to the Arlington-area of Virginia, where many military contractors are already based for its proximity to the federal government.
Facts and figures: Texas, along with Arizona, New Mexico, Oklahoma and Nevada, added more than 100,000 manufacturing jobs from January 2017 to January 2020, according to an analysis from the Wall Street Journal, based on data from the Bureau of Economic Analysis. That number accounts for 30% of U.S. job growth in the manufacturing sector and is about triple the national growth rate.
Republicans pitch their inflation ideas. Republicans are working on plans they say will help fight inflation, focusing on tax cuts, fewer regulations, more trade deals and rescinding unused federal spending, the Wall Street Journal reports (link). The policies are a preview of the fall midterm election campaigns, where inflation is likely to be top of mind for many voters. Sen. Chuck Grassley (R-Iowa), for instance, wants to adjust a tax-code provision for inflation, which would reduce some taxes on investments. Grassley said that would encourage more savings and cool demand.
Congress likely won’t need to raise the debt limit before the third quarter of 2023, thanks to strong growth in tax collections, according to the Bipartisan Policy Center. Congress has seen several partisan standoffs in recent years over raising the borrowing limit. The latest estimate means the debt limit won’t have to be raised until after the midterm elections this year.
Next hot industrial property market may be vacant land next to seaports. The flood of imports over the past two years has tied up space at gateways around the country, and the WSJ reports (link) that logistics companies and port operators are rushing to lease nearby lots to store containers waiting for rail or truck hookups. The rising demand is driving up rents and spurring more investment in coastal outdoor-storage properties. The Georgia Ports Authority has leased six lots in Georgia, Alabama and North Carolina for “pop-up” container yards since the Port of Savannah was swamped by inbound boxes, leading to an offshore vessels backup that stood at 28 container ships last week. Some companies are thinking beyond the empty lots in industrial zones. Short-term warehouse provider Chunker says it plans to use former Sears department store sites and parking lots near California ports.
Market perspectives:
• Outside markets: The U.S. dollar index was solidly lower in early trading. The yield on 10-year Treasurys slipped to 3.371% from 3.482% Tuesday. Gold futures rose 1% to $1,832.50 an ounce
• Coinbase, America’s biggest cryptocurrency exchange, announced it has sacked 18% of its workforce amid a market meltdown. Brian Armstrong, the CEO, reckoned the “crypto winter” could last for “an extended period” and would shrink trading revenues, the company’s biggest source of income. He also conceded that Coinbase had grown too quickly during the crypto boom. Meanwhile, Bitcoin tumbled Wednesday to a new 18-month low, spurring a sharp fall in crypto markets sparked by crypto lender Celsius freezing customer withdrawals. The world’s largest cryptocurrency fell to under $21,000. Bitcoin has lost around 28% since Friday and around 70% from its all-time high in November.
• Crude oil futures: West Texas Intermediate crude fell 0.5% to $118.29 a barrel.
• Oil production among the 13 countries that make up OPEC dropped by 176,000 barrels a day last month to average roughly 28.5 million barrels a day, data from the cartel released Tuesday showed. The declines came as protesters closed major oil refineries in Libya, where output fell by 186,000 barrels a day. Output also fell in Nigeria by 45,000 barrels a day and Iraq by 21,000 barrels a day.
• The extended shutdown of a key U.S. natural gas export complex will strain European efforts to amass emergency stockpiles before the Northern Hemisphere winter arrives. Freeport LNG’s announcement that its Texas liquefied gas facility will be closed four times longer than previously thought impacted domestic and overseas energy markets Tuesday. The disruption comes at a time when gas-starved Europe is increasingly dependent on U.S. suppliers to replenish inventories while seeking to shun Russian supplies in response to the invasion of Ukraine. European gas futures surged the most since March. Market impact: U.S. natural-gas prices plummeted, greatly reducing export capacity.
• Major water cutbacks loom as shrinking Colorado River nears ‘moment of reckoning’. As the West endures another year of unrelenting drought worsened by climate change, the Colorado River’s reservoirs have declined so low that major water cuts will be necessary next year to reduce risks of supplies reaching perilously low levels, a top federal water official said Tuesday. Bureau of Reclamation Commissioner Camille Calimlim Touton testified during a Senate committee hearing that protecting “critical levels” at the country’s largest reservoirs — Lake Mead and Lake Powell — will require much larger reductions in water deliveries. “The challenges we are seeing today are unlike anything we have seen in our history,” Touton said. The Colorado River supplies water to nearly 40 million people in cities from Denver to Los Angeles and farmlands from the Rocky Mountains to the U.S./Mexico border. Roughly 80% of the river’s flow is used for agriculture, and most of that for thirsty crops such as alfalfa, which is mainly grown for cattle, both in the U.S. and overseas. “I’m not suggesting that farmers stop farming, but rather that they carefully consider crop selection and make the investments needed to optimize irrigation efficiency,” said John Entsminger, general manager of the Southern Nevada Water Authority, which supplies the Las Vegas area. “By reducing their use of Colorado River water, agricultural entities are protecting their own interests.” Link for more via the Los Angeles Times.
• NWS weather: Dangerously hot and humid conditions to persist from the Upper Midwest to the Southeast... ...Severe thunderstorms likely across portions of the Upper Midwest today... ...Excessive Heat forecast to return to parts to the Southwest on Thursday.
Items in Pro Farmer’s First Thing Today include:
• Followthrough selling in corn, wheat overnight
• Record May NOPA soy crush expected
• Romania faces ‘epic’ challenge in exporting Ukrainian grain (details below)
• Kazakhstan extends wheat, flour export quotas
• UAE suspends exports of Indian wheat
• China to buy more pork for state reserves
• Cash cattle trade higher
• July hogs take over lead-month status at discount to cash
RUSSIA/UKRAINE |
— Summary: The last bridge to the city of Sievierodonetsk fell as street battles raged, and some Western officials questioned Ukraine’s ability to keep resisting the Russian onslaught.
- Ukraine group meets. U.S. Secretary of Defense Lloyd Austin hosts the third meeting of the Ukraine Contact Group, comprised of nations supporting Ukraine’s defense, on the margins of a two-day meeting of NATO defense ministers in Brussels. The meeting comes days after Ukrainian representatives published a wish list of military equipment they want Western partners to provide as Ukraine continues to fight Russian forces in the east of the country.
— Market impacts:
- A sanctions impact rethink? Some Biden administration officials are privately expressing concern that sanctions meant to punish Vladimir Putin’s government and pressure him to pull his forces back from Ukraine are exacerbating inflation, worsening food insecurity and punishing ordinary Russians more than Putin or his allies. Bloomberg reports that officials were “initially impressed by the willingness of companies to abruptly ‘self-sanction.’ But the administration was caught off-guard by the potential knock-on effects — from supply chain bottlenecks to uninsurable grain exports.”
- Ukraine’s farm industry has lost $4.3 billion from war damage. Ukraine has suffered $4.3 billion in damage to farmland, machinery and livestock due to Russia’s invasion, according to the Kyiv School of Economics. About half of the “already immense” destruction from the war comes from pollution caused by mines and unharvested crops, according to a report by authors Roman Neyter, Hryhorii Stolnikovych, and Oleg Nivievskyi. Almost a quarter of the total — $926 million — accounts for damage done to farm machinery due to military activity and occupation, they write.
President Biden said the U.S. will build temporary silos on Poland’s border with Ukraine to facilitate grain exports out of the war-torn nation and address surging food prices amid Russia’s invasion. “We’re going to build silos, temporary silos in the borders of Ukraine, including in Poland. So, we can transfer [grain] from those cars into those silos into cars in Europe and get it out into the ocean and get it out across the world. But it’s taking time,” Biden said in a speech at the AFL-CIO convention in Philadelphia, where he discussed potential solutions to rising food prices across the country. Biden said Tuesday that the grain can’t be shipped out through the Black Sea “because it’ll get blown out of the water” by Russia’s naval blockade. The U.S. for now has ruled out sending military ships into the region, which would risk Russian retaliation. Link to Biden’s comments.
Biden noted the U.S. has been working on a plan to export the grain through other countries by rail but admitted the overland routes have with logistical problems. Rail routes can only move a fraction of the grain that Ukraine normally exports from its Black Sea ports and Ukrainian trains operate on a wider rail gauge than that used by the rest of the tracks in Europe. Biden suggested building silos is a better option for now and could help Ukraine buy some time.
Russian forces are continuing to target Ukraine’s grain silos and agricultural infrastructure, while stealing grain from the country, U.S. and Ukrainian officials have said. “Russia, we believe, has stolen several hundred thousand tons of grain from Ukraine and then sent it out on small ships from Russian ports,” Jim O’Brien, the State Department’s head of sanctions, recently told reporters. “Now, that grain has ended up with Russia’s friends.”
- Romania faces ‘epic’ challenge in exporting Ukrainian grain. Romania faces a logistical challenge of “epic proportions” and requires new infrastructure to help transport Ukrainian grain to global markets, President Klaus Iohannis said. Ukraine is sending grain to the Romanian Black Sea port of Constanta as it tries to avoid a storage and logistics bottleneck as winter crop harvest starts. “These logistical routes, this entire large capacity transport logistics do not exist. We are in a position to develop transport capabilities, maybe not from zero but from a pretty low level to a very high level.” Iohannis said a broad-gauge train line compatible with Ukraine’s must connect the border to one of its Danube ports.
Russia’s oil-export revenues surged to around $20 billion in May despite shipping lower volumes, as a rally in global energy prices buoyed its coffers, according to the International Energy Agency, an 11% increase from a month earlier, taking Russia’s total revenue for shipping crude and oil products roughly back to levels before the invasion of Ukraine, even as exports fell by about 3%, the IEA estimates in its monthly report published today.
POLICY UPDATE |
— House announces farm bill listening sessions. House Agriculture Chairman David Scott (D-Ga.) announced the first in a series of listening sessions entitled “A 2022 Review of the Farm Bill: Perspectives from the Field.” The House Agriculture Committee has conducted several hearings in Washington, DC focused on the 2018 Farm Bill and improvements that can be made in the 2023 Farm Bill. This series of listening sessions will allow House Agriculture Committee Members to gather input from producers and consumers on the ground across the country, the panel said.
The first session in this series will take place at 11:00 a.m. MT (1:00 p.m. ET) at Central Arizona College in Coolidge, Arizona on Saturday, June 25. It will be hosted by Rep. Tom O’Halleran of Arizona and chaired by Rep. Cheri Bustos of Illinois. This event is open to the public.
— House GOP comments on ag agenda. To help the farm economy, President Biden should abandon a WOTUS re-write, allow more oil and gas drilling on federal land and adopt a friendlier stance on use of pesticides, said 96 House Republicans, including leader Kevin McCarthy, the senior Republican on the House Agriculture Committee. Link for details.
PERSONNEL |
— Biden taps former Atlanta mayor for senior White House role. Former Atlanta Mayor Keisha Lance Bottoms will replace Cedric Richmond as director of the White House Office of Public Engagement, according to a White House official.
CHINA UPDATE |
— Biden weighs partial tariff rollback to ease inflation. President Biden is weighing whether to roll back some of the tariffs that former President Donald Trump imposed on Chinese goods, in hopes of mitigating the most rapid price gains in 40 years, according to senior administration officials. A study this year predicted that a move to lift tariffs could save households $797 a year, but Biden administration officials say the actual effect would most likely be far smaller, in part because there is no chance President Biden will roll back all the federal government’s tariffs and other protectionist trade measures.
— China’s industrial output picks up, retail sales remain weak. Chinese industrial output grew 0.7% in May from a year earlier, after falling 2.9% in April. The uptick in the industrial sector was underpinned by the easing of Covid curbs and strong global demand. However, retail sales fell another 6.7% in May versus year-ago on top of an 11.1% contraction the previous month, as shoppers were confined to their homes in Shanghai and other cities by tight Covid restrictions.
— China keeps rates unchanged. China’s central bank rolled over maturing medium-term policy loans on Wednesday, while keeping interest rates unchanged for a fifth straight month, matching market expectations. The People’s Bank of China (PBOC) said it was keeping the rate on 200 billion yuan ($29.68 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.85% from the previous operation.
— U.S. releases guidance on Uyghur Forced Labor Prevention Act. The U.S. Customs and Border Protection (CBP) this week released a 17-page document noting the processes and procedures to be used to implement the Uyghur Forced Labor Prevention Act (UFLPA). Enforcement will start June 21. CBP will issue notices of detention, exclusion or seizure to imports on products shipped to the U.S. on or after June 21. The guidance specifies that cotton, polysilicon, and tomatoes are “high-risk commodities” and it provides commodity-specific supply chain tracing documentation for those products. For cotton, CBP said the documentation includes records showing the “entire supply chain, from the origin of the cotton at the bale level to the final production of the finished product.” Link for details.
TRADE POLICY |
— WTO confab has few deliverables. The four-day summit of the World Trade Organization (WTO) in Geneva, the first ministerial meeting since 2017, is coming up short on deliverables, largely due to gridlock over lowering subsidies and easing trade flows. The closing session will end today, though there are calls to extend the conference by an extra 24 hours. At this year’s confab, talks occurred on ways to tackle food security threatened by the invasion of Ukraine. Efforts have been made for countries to send food to the World Food Program, but there are many nations that are holding out as they worry about their own resources.
ENERGY & CLIMATE CHANGE |
— Biden is sending letters today to Marathon Petroleum Corp., Valero Energy Corp., ExxonMobil, Phillips 66, Chevron, BP, and Shell. He asked top oil refiners to explain the “unprecedented disconnect between the price of oil and the price of gas.” The president is urging the heads of these companies to take part in an “emergency meeting” with Energy Secretary Jennifer Granholm via the National Petroleum Council to discuss ways to lower those costs. Biden also wants to know if there has been a loss of oil refining capacity that would explain some of the price increases.
Biden comments: “Vladimir Putin’s war of aggression, and the bipartisan and global effort to counter it, [have] disrupted the global supply of oil and driven up the global price. But the sharp rise in gasoline prices is not driven only by rising oil prices, but by an unprecedented disconnect between the price of oil and the price of gas. The last time the price of crude oil was about $120 per barrel, in March, the price of gas at the pump was $4.25 per gallon. Today, gas prices are 75 cents higher, and diesel prices are 90 cents higher.”
— DOE unveils fourth SPR sale and results from third sale. The Department of Energy (DOE) issued a notice of sale for the release of 45 million barrels of crude oil from the Strategic Petroleum Reserve (SPR), including 29.5 million barrels of sweet crude and 15.5 million barrels of sour crude. Deliveries under this sale will take place Aug. 16-Sept. 30 with bids due in the first notice of sale not later than 11 am ET June 28, with award contracts issued no later than July 8. The sales will be conducted from the following four SPR sites:
- Up to 8.25 million barrels from Bryan Mound
- Up to 15.5 million barrels from Big Hill
- Up to 14 million barrels from West Hackberry
- Up to 7.25 million barrels from Bayou Choctaw
DOE also announced the contracts for the notice of sale that was announced May 24, with the release of those supplies June 15-July 31. DOE offered up to 40.1 million barrels via that sale and accepted offers totaling 36.31 million barrels to nine firms. The sales are under the announcement to release up to 1 million barrels per day from the SPR for six months.
Bottom line: As of June 11, DOE data shows that 511.6 million barrels of crude were still in the SPR, including 236.5 million barrels of sweet and 275.1 million barrels of sour crude. DOE data show SPR releases have totaled 82.2 million barrels since January.
CORONAVIRUS UPDATE |
— Summary:
- Global Covid-19 cases at 536,650,395 with 6,312,453 deaths.
- U.S. case count is at 85,762,625 with 1,011,925 deaths.
- Johns Hopkins University Coronavirus Resource Center says there have 591,406,403 doses administered, 221,768,203 have been fully vaccinated, or 67.31% of the U.S. population.
— FDA advisers recommend Moderna’s Covid-19 vaccine for older children. Advisers to the Food and Drug Administration (FDA) on June 14 recommended the agency grant emergency authorization to Moderna’s COVID-19 vaccine for children aged 6 to 17. The FDA, which typically follows the committee’s decisions, will now decide whether to authorize the vaccine for emergency use in these age groups.
POLITICS & ELECTIONS |
— Results of Tuesday state primaries and special election in Texas:
- Maine: The primary race for the gubernatorial election is already set, as neither incumbent Democratic Gov. Janet Mills nor former Republican Gov. Paul LePage faced any primary challengers. LePage is seeking a third term, but it will be a competitive race. Physician Sam Hunkler is also running for election as an Independent candidate.
- Nevada: Among the Republicans winning their primaries were Adam Laxalt, a Senate candidate and former Nevada attorney general who led former President Donald Trump’s efforts to overturn the state’s 2020 election results, and Jim Marchant, a secretary of state candidate who has pressed conspiracy theories about voting machines and hopes to oversee the state’s 2024 election. Marchant will face Cisco Aguilar, a Democrat and former aide to the late Senate majority leader Harry Reid. In the Senate race, Democrat Cortez Masto will face Laxalt, the grandson of a former Nevada governor and senator. (In the primary, Laxalt beat Sam Brown, 55% to 36%.) In the governor’s race, Clark County Sheriff Joe Lombardo won the Republican nomination and will face Democrat Gov. Steve Sisolak in November. Rep. Dina Titus (D-Nev.) beat the Bernie Sanders-endorsed Amy Vilela, 84% to just under 16%. Beyond those statewide offices, three Nevada House seats are labeled tossups for the fall, a potential windfall for Republicans as they seek control of Congress.
- North Dakota: U.S. GOP Sen. John Hoeven easily won his Republican primary over oil field worker Riley Kuntz. The Associated Press called the race shortly after the polls closed in North Dakota. Earlier this year, Hoeven survived a conservative challenge to his endorsement by the state Republican Party at its convention. Hoeven will be favored to win a third term this fall in Republican-leaning North Dakota against Democrat Katrina Christiansen who won her primary Tuesday as well.
- South Carolina: Rep. Tom Rice was defeated by a Republican primary challenger endorsed by Trump, but another South Carolina Republican, Rep. Nancy Mace, survived. Trump backed Katie Arrington, a former state lawmaker, to take on Mace and State Representative Russell Fry to challenge Rice. Mace received 53% of the vote compared to Arrington’s 45%. Fry had better than 51% of the vote compared to Rice’s 24.5%.
Texas: By flipping the Rio Grande Valley seat of former Rep. Filemon Vela in Texas, Mayra Flores became the first Republican to represent the majority-Hispanic district in the seat’s 10-year history and become the first Republican Latina the state has ever sent to Congress. Flores won a special election to fill the remainder of Vela’s term until the end of the year, becoming one of three Latinas to ever represent the state in Congress. The seat will again be up for grabs in the November general election. Her temporary victory foreshadows broader Republican gains in the Democratic stronghold of South Texas. Flores won with 51% compared to Democrat Dan Sanchez’s 43%. Flores will face off against Rep. Vicente Gonzalez (D-Texas) in November in the newly redrawn 34th District. Tuesday’s election took place under the old lines.
Cook Political Report House editor David Wasserman says Flores’ 51% showing in an 84% Latino seat is the latest sign of a GOP surge along the border. It also means that the Democrats’ House majority is down to 220 seats — the smallest majority in modern history. Wasserman says the fall campaign leans Dem.
— Bass is now leading Caruso in L.A. mayor race. A surge of late mail-in ballots gives her a 41%-38% edge in the L.A. mayoral primary race. Still, the race remains highly fluid and with many votes left to count — more than 365,820 countywide. The final results won’t be known for days or weeks.
— Democrats could experience a “greater-than-average” loss in the midterm elections this November, new Gallup polling suggests, finding that voters’ satisfaction with the country and federal government are largely at record lows compared with other midterm years. Link for details. Key poll findings:
- The Gallup poll, conducted May 2-22 among 1,007 U.S. adults, found only 41% approve of President Joe Biden’s job performance, 18% approve of Congress’ performance and 16% are “satisfied with the way things are going in the U.S.”
- Only 14% have a positive view of economic conditions right now and 46% rate the economy negatively, meaning Americans have a 32-point net negative view of the economy.
- All of those metrics are at least 10 points below the average for midterm years, based on Gallup’s polling going back to 1974.
CONGRESS |
— House passed a U.S. Supreme Court security bill yesterday, sending it to President Biden for his signature just days after an armed man was arrested near the home of Justice Brett Kavanaugh.
— McConnell to support new gun-safety legislation. Mitch McConnell, the highest ranking Republican in the U.S. Senate, said he’s inclined to support a bipartisan outline of new gun-safety legislation, indicating it could gain widespread backing.
— Agriculture-FDA appropriations up for House Ag Approps subcommittee markup. The USDA-FDA appropriations bill has a top-line total of $27.2 billion, a nearly $2.1 billion increase over fiscal 2022, though it’s less than the $28.5 billion sought by the Biden administration. The FDA would receive more than $3.6 billion in discretionary funds, a $341 million increase over fiscal 2022. The bill includes $6 billion in discretionary funding for the Special Supplemental Nutrition Program for Women, Infants and Children.
OTHER ITEMS OF NOTE |
— Supreme Court announces timelines on WOTUS, Proposition 12 cases. The U.S. Supreme Court said it will hear oral arguments in October in cases involving Waters of the U.S. (WOTUS) and on California’s Proposition 12. The industry’s core argument is that Prop 12 violates the “Dormant Commerce Clause,” a legal doctrine meant to prevent protectionism, or states giving their own businesses preferential treatment over businesses in other states. Industry groups argue that because most U.S. pork is produced outside California, the financial and logistical burden of complying with Prop 12 falls mostly on out-of-state producers, and that those burdens outweigh any of the law’s supposed benefits.
The court’s 2022-2023 term will start Oct. 3 with arguments in Sackett v EPA dispute on WOTUS. On Oct. 11, the court will hear arguments in the pork industry’s and Farm Bureau’s challenge of California’s Proposition 12. Final decisions may not come until mid-2023, but Michael Formica, the assistant vice president and general counsel for NPPC, told reporters last week at the World Pork Expo that he expects the Supreme Court to come to a decision by January or February of next year.
— WHO to meet on monkeypox. The World Health Organization will bring together an emergency committee of experts on June 23 to discuss whether to declare the spread of monkeypox as an international health emergency. Ibrahima Soce Fall, the WHO’s emergencies director for Africa, said the meeting was not meant to cause alarm. “We don’t want to wait until the situation is out of control to start calling the emergency committee,” he said. So far this year, 1,600 cases and almost 1,500 suspected cases have been reported in 39 countries.
— The Old Farmer’s Almanac says the full moon this month is a supermoon, appearing bigger and brighter than usual because the moon’s orbit is quite close to Earth, if you consider 238,000 miles to be “close.”
— Denmark and Canada finally put an almost 50-year border dispute to rest on Tuesday, agreeing to split Hans Island, an 0.5 square mile island equidistant from the coasts of Canada and Greenland roughly down the middle. The barren rock had become the site of the so called Whisky War, with Canadian and Danish forces planting flags (and bottles of Canadian whisky or Danish schnapps) to mark their territory over the years. “I think it was the friendliest of all wars,” Mélanie Joly, Canada’s foreign minister, said on Tuesday. “I’m happy to see that we’re resolving it with friends, partners and allies. … It’s a win-win-win.”