Weekend Updates: Aug. 25, 2024
— Pro Farmer on Friday released 2024 national corn and soybean estimates: U.S. corn crop at 14.979 billion bu. using an average yield of 181.1 bu. per acre. U.S. soybean crop at 4.740 billion bu. at an average yield of 54.9 bu. per acre. The national estimates reflect Pro Farmer’s view on production and yields. They consider data gathered during the recent Crop Tour and other factors like crop maturity, historical differences in Tour data versus USDA’s final yields, areas outside those sampled on Tour, etc. With USDA incorporating FSA certified acreage into its August crop estimates this year and Pro Farmer analysis showing it matched closely with past years’ August data compared to final planted acres, Pro Farmer made no acreage adjustments. — Pro Farmer editor Brian Grete sums up the completed Crop Tour: “The 2024 Pro Farmer Crop Tour was blessed with gorgeous weather, with crops showing they could use another rain or two to fulfill their full potential. Eastern areas will likely challenge or break yield records, with few signs of significant problems. Still, variability of the crops due to spring weather and condition issues could keep yields from being even bigger. Crops in the western Belt also displayed strong production potential, although there were more issues than in the east. Immaturity in South Dakota, localized drought and hail in Nebraska, and spotty Iowa problems, particularly in the northwest, may limit yields. Minnesota crop problems were worse. But most state prospects are also high.” — The White House race is still very close, based on national and key swing state polls. The focus ahead will be on post-Labor Day surveys of the contest between Harris and Donald Trump. Usually, presidential candidates get a small positive bump in polls following conventions. Since Joe Biden’s withdrawal July 21, the polls have moved Harris’ direction. But after that, it depends on actual candidate positions. Of note: The White House winner gets veto power over next year’s rewrite of the tax code. Also, either political party would need to win the White House, House and Senate to up the chances for any budget reconciliation measures. Budget reconciliation is a legislative process in Congress that enables expedited consideration of certain budgetary legislation. It is primarily used to alter spending, revenues, taxes, and the federal debt limit, and it allows for the passage of legislation in the Senate with a simple majority. Unlike most other legislation in the Senate, reconciliation bills require only a simple majority (51 votes, or 50 votes plus the vice president as a tiebreaker) for passage, rather than the 60 votes typically needed to overcome a filibuster. The reconciliation process is restricted to provisions that directly affect the federal budget, such as changes in spending, revenues, and the debt limit. The “Byrd Rule” prohibits the inclusion of provisions that do not have a significant budgetary impact or that would increase the federal deficit beyond a ten-year period. Changes to Social Security are also prohibited. Congress can pass up to three reconciliation bills per year, each addressing spending, revenue, or the debt limit. However, in practice, a single reconciliation bill often addresses multiple areas. If both chambers pass the reconciliation bill, it is sent to the president for signature or veto. — Another important topic likely for the next president and Senate: picking (president) and voting on (Senate) one if not more new Supreme Court justices. Ages of the current Supreme Court justices: • Clarence Thomas: 75 years old BTW: The oldest age a justice has served on the Supreme Court is 90 years old. Justice Oliver Wendell Holmes Jr. reached this age before retiring from the Court in 1932. — Key questions surround Democratic presidential candidate Kamala Harris: How would she govern on issues like the economy, climate, and foreign policy? The Economist wrote about that topic, and we have the details in The Week Ahead (link). — A different kind of Kamala Harris word salad. Vice President Kamala Harris’ recent policy pronouncements have highlighted the term “opportunity economy,” which serves as a central theme in her campaign. This term, while traditionally associated with Republican rhetoric, has been adapted by Harris and the Democratic Party to frame their economic policies. The Week Ahead looks at this and other words Harris is emphasizing in her run to win the White House. — Biggest stock market event in the coming week: Nvidia will report its second-quarter results after the bell on Wednesday. Nvidia earnings are expected to soar 141% vs. a year earlier with sales up 113% to $28.73 billion. Those would be the fifth straight quarter of triple-digit gains for both. Nvidia stock rose 3.8% to 129.37 this past week, thanks to Friday’s 4.55% gain. — Back-to-school spending in the U.S. for 2024 is projected to reach $38.8 billion, making it the second highest on record. Households are expected to spend an average of $874.68 on items such as electronics, clothing, and supplies for K-12 students. Despite economic uncertainty, consumers are still spending significantly but are increasingly focused on finding bargains due to rising costs. Retailers are responding with competitive pricing and promotions. Additionally, back-to-college spending is projected to hit $86.6 billion, highlighting the importance of electronics in both segments. — Lower mortgage rates yet to boost housing market, says Vince Malanga. Despite a decline in the ten-year note yield and a weakening dollar, Malanga, president of LaSalle Economics, says the housing market has not yet responded to lower mortgage rates. Malanga suggested that a sustained drop below 3.75% might be necessary to stimulate demand, but noted that this could be challenging due to high federal deficits and potential risk premiums demanded by investors, which could stifle a housing rebound. In tomorrow’s Updates, we will have what Malanga says about Fed Chair Jerome Powell’s comments last Friday at the Jackson Hole, Wyoming, confab. — The Federal Trade Commission (FTC) is taking Kroger and Albertsons to court this coming week to block their $24.6 billion merger, arguing it could harm competition and raise prices for consumers. FTC Chair Lina Khan is using the case to test novel antitrust theories, including defining the market narrowly and suggesting the merger would harm “union grocery labor.” Despite Kroger’s promises of savings and higher wages, the FTC claims the merger would reduce competition and market concentration. Kroger is challenging the FTC’s authority, questioning the constitutionality of the agency’s administrative process. Vice President Kamala Harris has expressed support for the FTC’s actions, though critics argue this could lead to higher food prices and job losses if the merger is blocked. — As of now, the talks between Israel and Hamas are ongoing, with both parties engaged in serious negotiations for a ceasefire and the release of hostages. These discussions have been facilitated by Egyptian and Qatari mediators, with significant involvement from the United States. Negotiations commenced as planned on Sunday. Israel also relaxed safety restrictions on its population on Sunday night, after earlier imposing a state of emergency and shutting its main airport for several hours. Over the weekend, developments included Israel launching a pre-emptive military operation against Hezbollah targets in Lebanon, before the Iran-backed militant group fired hundreds of rockets at Israeli military targets, which it said was the first phase of its retaliation for Israel’s assassination of a senior leader. The Wall Street Journal reports that after a heavy exchange of fire early Sunday between Israel and Iran-backed Shiite militia Hezbollah, the regional military powers signaled a desire to avoid a spiral that could lead to a wider Mideast conflict. Meanwhile, Hamas’ acceptance of a draft proposal for a truce and hostage release agreement was unexpected and caught Israel by surprise. The proposal involves a phased approach to de-escalation, starting with a six-week ceasefire during which hostages would be released in exchange for Palestinian prisoners. This phase would also see Israeli troops withdrawing from certain areas in Gaza to allow humanitarian aid and the return of displaced civilians. Despite these advancements, there remain significant challenges. The main point of contention is the duration and terms of the ceasefire. — Jake Sullivan, the U.S. National Security Advisor, is set to visit China for the first time in his current role, with meetings scheduled with Chinese Foreign Minister Wang Yi from Aug. 27-29. This visit is part of a strategic effort to stabilize U.S.-China relations amid heightened tensions, especially concerning Taiwan. The U.S. plans to express concerns over China’s increased military, diplomatic, and economic pressure on Taiwan, which Washington views as destabilizing and potentially escalating tensions. The U.S. will urge Beijing to engage in meaningful dialogue with Taipei, reiterating its commitment to the “One China” policy while opposing unilateral changes to the status quo. The meeting comes at a critical time, as the U.S. presidential election approaches, with both nations seeking to manage their competitive relationship while addressing various strategic concerns, including those related to the South China Sea, North Korea, and broader regional stability. |