Oil rally continues | House impeachment inquiry | Kim & Putin begin talks | Vilsack on ethanol
Today’s Digital Newspaper |
MARKET FOCUS
- Shrinking populations might have advantages for wealthiest nations
- U.S. poverty soars in 2022, especially among children, as pandemic aid expires
- Oil prices hit 2023 highs on Tuesday
- Gasoline prices spur broader inflation
- Panama Canal faces prolonged drought, may further restrict ship transits
- Recap of USDA U.S. crop production, carryover
- USDA lowers meat production and exports
- NWS weather outlook
RUSSIA & UKRAINE
- Biden admin. nears authorizing of Army Tactical Missile Systems (ATACMS) to Ukraine
- Ukrainian missile strikes hit Russian navy shipyards in Crimea, damaging warships
- Ursula von der Leyen to emphasize impact of Russia’s conflict in Ukraine on EU
- Depending on EU stance, Poland will extend its ban on imports of grain from Ukraine
POLICY
- Dept. of Labor proposes new rule to enhance protections for temporary farm workers
PERSONNEL
- BP Chief Bernard Looney resigns abruptly, leaving uncertainty in clean energy plan
CHINA
- Schumer organizes bipartisan delegation visit to China in October
ENERGY & CLIMATE CHANGE
- California lawmakers pass sweeping emissions disclosure act for large companies
- Vilsack: Ethanol industry faces ‘make-or-break’ moment
LIVESTOCK & FOOD INDUSTRY
- Kellogg Company revealed plans to divide itself into two separate entities
- NPPC discusses response to animal welfare laws after Supreme Court ruling
- McDonald’s to phase out self-serve soda machines in U.S. restaurants by 2032
HEALTH UPDATE
- CDC advisory committee recommends new Covid-19 vaccination
- FDA advisory panel: Ingredient in widely used oral decongestants doesn’t work
CONGRESS
- McCarthy directs House committees to open formal Biden impeachment inquiry
- U.S. gov’t shutdown odds continue to rise
OTHER ITEMS OF NOTE
- Fraudsters may have stolen up to $135 billion in unemployment aid during pandemic
- North Korea launched two suspected short-range ballistic missiles
- Today’s calendar of events
MARKET FOCUS |
Equities today: Stocks fell across Asia as oil prices extended gains ahead of the U.S. CPI report out later this morning.
U.S. equities yesterday: The Dow ended down 17.73 points, 0.05%, at 34,645.99. The Nasdaq fell 144.28 points, 1.04%, at 13,773.61. The S&P 500 lost 25.56 points, 0.57%, at 4,461.90.
Opening statements in the biggest antitrust trial in over two decades between Google and the Justice Department highlighted the key points of contention:
- The Justice Department argues that Google used substantial payments to secure its dominance in internet search, excluded competitors, and stifled innovation.
- Google’s Alphabet unit countered by emphasizing that consumers overwhelmingly prefer its search engine.
- The DOJ alleges that Google’s agreements with companies like Apple and Samsung to make its search engine the default on web browsers and mobile devices unlawfully helped maintain its monopoly.
- Google, which controls approximately 90% of global search queries, asserts that it competes fairly for these contracts and that users have the option to switch away from default settings.
The trial, which does not involve a jury, is expected to continue until mid-November.
Agriculture markets yesterday:
- Corn: December corn futures fell 9 1/4 cents to $4.76 1/2, nearer the session low.
- Soy complex: November soybeans fell 22 1/2 cents to $13.46 1/2, ending the session below the 20- and 40-day moving averages and marking the lowest close since Aug. 22. December meal fell $6.80 to $398.10, while December soyoil fell 43 points to 60.07 cents.
- Wheat: December SRW wheat rose 3 cents to $5.87 1/2, closing nearer the session high. Prices hit another contract low. December HRW wheat gained 7 cents at $7.30 3/4. Prices closed nearer the session high and hit another two-year low early on. December spring wheat rose 12 1/4 cents to $7.79.
- Cotton: December cotton rose 52 points to 88.30 cents, ending near the session high and marking the highest close since Sept. 5.
- Cattle: October live cattle futures ended the day 7.5 cents lower at $184.15, despite trading as low as $183.05. October feeder cattle futures closed 20 cents lower at $261.25, though deferred contracts saw slight gains.
- Hogs: October lean hog futures led the nearby contracts higher Tuesday, leaping $2.725 to $85.275, whereas the deep deferred contracts dipped on the day.
Shrinking populations might have advantages for the wealthiest nations, according to a recent paper exploring the consequences of the anticipated demographic decline in the United Kingdom. The U.K.'s Office for Budget Responsibility argues that conventional analysis of the benefits of population growth tends to overlook the expenses associated with constructing new residences, educational institutions, road infrastructure, and other essential public and private investments required to accommodate future demands.
When a population expands rapidly, there is an increased cost associated with maintaining the “capital assets per person.” This higher expenditure places greater demands on domestic savings, resulting in a reduced portion of income available for consumption. Conversely, a declining population necessitates less investment, potentially leading to faster growth in real wages.
Quotes of note:
- Walmart CEO Doug McMillon sounded a bullish tone, telling a Goldman Sachs investor conference that “things have held up better than I would have guessed. And I think the employment situation, wage increases, some pockets of disinflation are helping that.”
- Not so great. “The fact that we are seeing elderly homelessness is something that we have not seen since the Great Depression.” — University of Pennsylvania social-policy professor Dennis Culhane, describing the growing number of homeless baby boomers. Those on fixed incomes must contend with the high cost of housing, waiting lists for long-term care facilities and limited retirement savings. More seniors on the street or in shelters adds complications and expenses for hospitals, crisis services and taxpayers.
U.S. poverty soars in 2022, especially among children, as pandemic aid expires. In 2022, poverty rates in the U.S. experienced a sharp increase, primarily impacting children, as living costs surged and pandemic-related federal aid programs came to an end. The Census Bureau reported that the poverty rate jumped from 7.8% in 2021 to 12.4% in 2022, marking the largest one-year increase on record. Child poverty more than doubled during this period, rising to 12.4% from a record low of 5.2% in the previous year. These statistics are based on the Supplemental Poverty Measure, which considers government assistance and regional cost-of-living differences.
This surge in poverty follows two years of significant declines, driven by safety net programs established or expanded during the pandemic, such as direct payments to households, enhanced unemployment and nutrition benefits, increased rental assistance, and an expanded child tax credit. However, the expiration of most of these programs in 2022 left many families struggling to cope with rising prices, despite a robust job market and an improving economy. Consequently, overall poverty levels now resemble those of 2019.
Bottom line: The combination of declining financial support and rising living costs has left many Americans struggling to make ends meet, particularly in terms of housing expenses, resulting in increased demand for assistance from organizations like food banks.
Source: New York Times
Market perspectives:
— Outside markets: The euro was steady against the dollar following a Reuters report that said the ECB expects inflation to remain above 3% next year. Treasury two-year yields, which are more sensitive to Fed policy than longer maturities, stayed firm above 5%, while their 10-year peers held at 4.28%. A U.S. 10-year auction Tuesday drew the highest yield since 2007 as investors demand extra compensation for elevated inflation and rising debt issuance. West Texas Intermediate crude rose 0.2% to $89.04 a barrel. Spot gold fell 0.2% to $1,909.81 an ounce.
— Oil prices hit 2023 highs on Tuesday, after OPEC in its monthly report forecast a tighter supply outlook and growing demand in 2024. Global oil markets face a supply shortfall of 3.3 million barrels a day next quarter as Saudi Arabia extends production cuts, while the U.S. Energy Information Administration predicted a more modest 230,000-barrel deficit. This may be the biggest deficit in more than a decade. Brent crude, the international benchmark, rose 1.8% to $92.28 per barrel on Tuesday and U.S. marker West Texas Intermediate added 2% to $89.10. Both prices reached their highest level since November 2022.
— Gasoline prices spur broader inflation. Americans paid more at the pump during August, and those higher gasoline prices put upward pressure on overall inflation, economists said. The average price of a gallon of regular gasoline was $3.84 in August compared with $3.60 in July, according to OPIS, an energy-data and analytics provider. Unlike the CPI, those gasoline prices aren’t adjusted for seasonality. Higher gasoline prices last month reflected oil-production cuts by Saudi Arabia and Russia, among other factors.
— Panama Canal faces prolonged drought, may further restrict ship transits. The Panama Canal anticipates that extreme drought conditions will persist into the next year, continuing to hinder the passage of vessels through the crucial interoceanic waterway. According to Panama Canal Administrator Ricaurte Vásquez, the ongoing drought is due to the El Niño weather pattern, resulting in lower water levels in the canal’s feeding lakes.
Vásquez indicated that if conditions do not improve, they may consider further reducing the number of ship transits through the canal. The canal administration believes it can maintain the current reduced level of operations throughout the remainder of the year.
In July, the canal already limited the daily number of vessel transits from 36 to 32 to conserve the water necessary for canal operation. The primary concern is to keep water levels sufficient for vessels with a draft of 44 feet, allowing 70% of the canal’s customers to use it. Others may be required to reduce their cargo loads to navigate the waterway.
— Recap of USDA U.S. crop production
- Corn: 15.134 billion bu.; trade expected 15.008 billion bu.
— Compares to 15.111 billion bu. in August; 13.730 billion bu. in 2022
— USDA raised its corn crop estimate 23 million bu. from last month, whereas traders expected a 103-million-bu. reduction. The national average yield was cut 1.3 bu. from last month to 173.8 bu. per acre. But harvested acres increased 774,000 acres to 87.096, more than offsetting the cut to yield.
- Soybeans: 4.146 billion bu.; trade expected 4.157 billion bu.
— Compares to 4.205 billion bu. in August; 4.276 billion bu. in 2022
— USDA lowered its soybean crop estimate 59 million bu. from last month, whereas traders expected a 48-million-bu. cut. The yield was cut 0.8 bu. to 50.1 bu. per acre. USDA raised harvested area by 95,000 acres to 82.791 million acres.
- Cotton: 13.132 million bales; trade expected 13.57 million bales
— Compares to 13.922 million bales in August; 14.47 million bales in 2022
— USDA cut its cotton crop estimate 860,000 bales from last month, which was more than double the decline traders anticipated. The national average yield increased 7 lbs. to 786 lbs. per acre. But USDA cut harvested acreage by 603,000 acres, including 340,000 acres in Texas and 80,000 acres in Georgia.
— USDA U.S. carryover:
- Corn: 1.452 billion bu. for 2022-23; down from 1.457 billion bu. in August
— 2.221 billion bu. for 2023-24, up from 2.202 billion bu. in August - Soybeans: 250 million bu. for 2022-23; down from 260 million bu. in August
— 220 million bu. for 2023-24, down from 245 million bu. in August - Wheat: 615 million bu. for 2023-24, unchanged from 615 million bu. in August
- Cotton: 4.25 million bales for 2022-23; up from 3.7 million bales in August
— 3.0 million bales for 2023-24, down from 3.1 million bales in August
— USDA cut its expectations for U.S. cotton exports by 860,000 bales to 12.3 million bales. That further narrows the gap between Brazilian and U.S. exports, positioning the South American nation to become the world’s top exporter. Brazil’s cotton exports were raised to 11.8 million bales, up from 11.25 million.
— USDA lowers meat production and exports. USDA cut its beef production forecast by 40 million lbs. from last month amid a slower pace of marketings during the third quarter. Beef production is now expected to drop 1.35 billion lbs. (4.8%) from last year. USDA lowered its 2023 beef export forecast 160 million lbs. from last month, with shipments now expected to fall 13.8% from year-ago. Those changes resulted in no adjustment to the 2023 average cash steer price, which is projected at $178.50, unchanged from last month but up $34.10 from last year.
For 2024, USDA made no change to its beef production projection, but reduced exports. Beef production is forecast to 6.6% next year, with exports likely to drop another 5.0%.
USDA cut its pork production forecast 105 million lbs. from last month amid “a lower expected pace of slaughter and lighter carcass weights,” though it is still expected to rise 0.6% from last year. The pork export forecast was cut 125 million lbs., though shipments are still expected to rise 7.2% from last year. USDA lowered its 2023 average cash hog price $2.30 from last month to $59.90, which would be down $11.31 from last year.
For 2024, USDA made no change to its pork production projection, but reduced exports. Pork production is expected to rise 0.6% from this year, while exports are still anticipated to rebound 1.5% from this year’s level.
— NWS weather outlook: Cool, wet weather with heavy rainfall and flooding possible from the Southwest to the Southern Plains... ...More heavy rain and possible flooding expected across the Northeast.... ...Dangerous surf and rip current conditions developing along the East Coast... ...Frost Advisories in effect over portions of the Upper Midwest.
RUSSIA/UKRAINE |
— Biden administration nears authorizing of Army Tactical Missile Systems (ATACMS) to Ukraine, a move reported by Reuters. This decision to supply long-range ground-launched missiles with a striking distance of up to 190 miles to Ukraine is expected to be finalized shortly, following recommendations from the State and Defense Departments.
Impact: The introduction of ATACMS missiles to Ukraine would significantly enhance its offensive capabilities by extending its strike range beyond the 140-mile range of Storm Shadow missiles and doubling the 93-mile range of Ground-Launched Small Diameter Bombs. This increased reach would enable Ukraine to target vital installations like logistical hubs and airfields in rear areas, including Crimea. However, the U.S. might not supply ATACMS in time or in sufficient quantities to ensure Ukraine’s counteroffensive success in 2023.
Background: Kyiv had been requesting ATACMS for several months, but U.S. had previously declined to provide them. The change in the Biden administration’s stance is attributed to diminished concerns about the escalation of the Russia-Ukraine conflict or the use of ATACMS against Russia itself.
— Ukrainian missile strikes hit Russian navy shipyards in Crimea, damaging warships. Ukrainian missile strikes targeted Russian navy shipyards in the Crimean port city of Sevastopol, resulting in significant explosions and a fire that damaged two warships undergoing repairs, according to Russian authorities. While there was no immediate claim of responsibility, Ukraine has previously carried out missile and drone attacks on critical Russian military and logistics facilities in Crimea, an area annexed by Russia in 2014.
The Sevmorzavod shipyard reported 24 injuries. Russia’s Ministry of Defense stated that 10 cruise missiles were fired at Sevastopol, with seven intercepted and three hitting the shipyard. Additionally, a Russian navy warship, Vasily Bykov, reportedly thwarted a separate Ukrainian naval drone attack on Russian ships.
Sevastopol serves as the headquarters of the Russian Black Sea Fleet and plays a pivotal role in launching cruise-missile attacks on Ukrainian cities. In another incident, Iranian-made Russian drones struck the Ukrainian port city of Izmail on the Danube delta, injuring six people.
Ukraine’s military intelligence chief, Lt. Gen. Kyrylo Budanov, emphasized that strikes on military-industry sites deep inside Russia have become a priority, highlighting drone attacks on a chip-manufacturing plant in Bryansk and alleged acts of sabotage at other military-industry facilities.
— Ursula von der Leyen to emphasize profound impact of Russia’s conflict in Ukraine on the European Union in her upcoming state of the union address. The President of the European Commission had previously conveyed to EU ambassadors this month that the EU must acknowledge the altered geopolitical landscape by expanding its borders. She further noted that Ukraine and Moldova should be considered for accession into the EU to align with these new realities.
— Poland will extend its ban on imports of grain from Ukraine unless the European Union allows its own restrictions to stay in place beyond Friday. Poland approved a plan to issue an ultimatum to the European Union (EU) just days before the scheduled expiration of the EU’s import restrictions. Hungary and Romania have also expressed their desire to extend these import restrictions until at least the end of the year.
Polish Agriculture Minister Robert Telus believes that the EU is likely to extend the current restrictions, stating that they are convinced the EU is wavering on this issue. He emphasized that if the EU doesn’t extend the restrictions, Poland will take a tough stance because it is in the interest of Polish farmers.
Some eastern European countries have restricted grain imports from Ukraine, arguing that these imports are undermining their own farming sectors. Tensions have escalated since a deal to facilitate Black Sea exports collapsed in July.
Ukrainian Deputy Economy Minister Taras Kachka has warned that if Poland unilaterally bans Ukrainian grain, Ukraine will file a complaint at the World Trade Organization (WTO). However, Poland will still allow the transit of Ukrainian grain through its territory to reach ports on the Baltic Sea or be sold elsewhere in the EU.
POLICY UPDATE |
— Dept. of Labor proposes new rule to enhance protections for temporary farm workers. The U.S. Department of Labor has introduced a new proposed rule aimed at bolstering protections for farm workers within the H-2A program. The rule intends to combat labor abuses and ensure fair treatment for agricultural workers. Key aspects of this proposed rule include:
- Worker Self-Advocacy: It enhances protections for workers advocating for better conditions and allows workers to invite guests, including labor organizations, to employer-provided housing. Employers must provide a worker list to labor organizations upon request and permit worker representation in meetings that might lead to discipline. Employers are also required to certify their commitment to labor neutrality agreements or provide an explanation if they won’t.
- Clarification of “For Cause” Termination: The rule clarifies the criteria for “for cause” terminations, preserving workers’ rights and access to work hours and transportation.
- Transparency in Foreign Labor Recruitment: Employers must share all agreements with agents or recruiters with the Department of Labor and disclose the identities of individuals soliciting H-2A workers on their behalf.
- Immediate Wage Rate Application: Wage rates would be immediately applicable upon publication in the Federal Register, ensuring workers receive up-to-date wages promptly. Employers failing to provide adequate notice of delayed start dates must compensate workers accordingly.
- Improved Transportation Safety: A seat belt requirement is introduced to enhance transportation safety for workers traveling long distances to and from worksites.
- Enhanced Enforcement: The rule expedites debarment proceedings for businesses violating H-2A program rules, streamlines enforcement actions, and restricts employers from withholding workers’ identification documents.
The proposed rule will undergo a 60-day public comment period upon publication in the Federal Register, with the Department of Labor considering all feedback before finalizing the rule.
PERSONNEL |
— BP Chief Bernard Looney resigns abruptly, leaving uncertainty in clean energy transition. In an unexpected move, BP’s CEO, Bernard Looney, has resigned, leaving a void in the company’s leadership at a critical juncture in its transition to clean energy. Looney was known for his aggressive push towards greener initiatives, including investments in hydrogen and offshore wind. However, his departure comes after issues related to the disclosure of past relationships with colleagues. This sudden change raises questions about the future direction of BP’s sustainability efforts.
CHINA UPDATE |
— Schumer organizes bipartisan delegation visit to China in October. Senate Majority Leader Chuck Schumer (D-N.Y.) is reportedly organizing a bipartisan congressional delegation visit to China in October, with plans to reach out to senators from both parties to join him on the trip, Punchbowl News reports. Sen. Mike Crapo (R-Idaho) is expected to lead the Republican delegation. The visit would also include stops in Japan and South Korea. Schumer has a long history as a China hawk and has championed legislation aimed at addressing economic and national security challenges posed by Beijing. Schumer previously visited China in 2011 with the late Sen. Harry Reid (D-Nev.).
Senate aides said that the majority leader also extended invitations to Sens. Bill Hagerty (R-Tenn.), John Cornyn (R-Tex.), Mike Rounds (R-S.D.), Martin Heinrich (D-N.M.) and Jeanne Shaheen (D-N.H.)
Approval needed: If the trip goes ahead, it would require approval from the Chinese government for entry. Secretary of State Antony Blinken, Treasury Secretary Janet Yellen, and Commerce Secretary Gina Raimondo have all visited China in recent months.
Rep. Ro Khanna (D-Calif.) told the Washington Post that he wants to organize a trip by House lawmakers.
ENERGY & CLIMATE CHANGE |
— California lawmakers pass sweeping emissions disclosure act for large companies. California lawmakers have given their approval to the Climate Corporate Data Accountability Act, a groundbreaking piece of legislation that mandates companies operating in California with annual revenues exceeding $1 billion to annually disclose their greenhouse gas emissions, including Scope 3 emissions. However, the act still awaits approval from California Governor Gavin Newsom.
Impacts: This act represents the most comprehensive emissions disclosure requirements proposed in the United States, impacting both private and publicly traded companies. If it survives legal challenges and receives final approval, it will directly affect over 5,000 companies and indirectly pressure even more to disclose Scope 3 emissions, extending accountability across supply chains.
Background: Starting in 2026, companies would be obliged to report Scope 1 and Scope 2 emissions, with the reporting of Scope 3 emissions mandated from 2027. Critics argue that the act imposes significant costs and burdens on companies, but its proponents believe it is a crucial step in addressing climate change and promoting transparency in corporate environmental responsibility.
— Vilsack: Ethanol industry faces ‘make-or-break’ moment. USDA Secretary Tom Vilsack emphasized the critical moment facing the ethanol industry, calling it a “make-or-break moment.” Commenting Tuesday at an event hosted by the ethanol lobby group Growth Energy, Vilsack urged ethanol producers to focus on reducing greenhouse gas emissions and seizing opportunities in the growing market for low-polluting jet fuel. “This is a critical moment — a make-or-break moment,” Vilsack said, according to Bloomberg. The industry’s future is closely tied to sustainable aviation fuel (SAF), with a potential 36-billion-gallon industry on the horizon. Ethanol producers are working to improve their environmental credentials to become a sought-after ingredient for SAF production.
The U.S. Treasury Dept. is working on guidance that will influence the industry and determine which fuels qualify for expanded tax incentives. Vilsack supports using an Energy Department model (GREET) to estimate greenhouse gas emissions from SAF production, a model favored by the industry.
Michael Berube, a deputy assistant secretary at the Energy Department, highlighted the potential for significant greenhouse gas reductions within current ethanol production if the right measures are taken.
LIVESTOCK, FOOD & BEVERAGE INDUSTRY |
— Kellogg Company revealed plans to divide itself into two separate entities: WK Kellogg Co, responsible for the North American cereal brand, and Kellanova, overseeing the global snacking business. Despite the division, consumers will still find the familiar Kellogg’s brand logo on packaging for both companies.
Key Details:
- WK Kellogg’s Portfolio: This entity will manage a range of popular cereal brands, including Kellogg’s, Frosted Flakes, Froot Loops, Mini-Wheats, Special K, Raisin Bran, Rice Krispies, Corn Flakes, Kashi, and Bear Naked.
- Kellanova’s Portfolio: Kellanova will oversee various brands, including Kellogg’s, Frosties, Zucaritas, Special K, Krave, Miel Pops, Coco Pops, and Crunchy Nut. Additionally, it will include a diverse lineup of well-known snacks such as Pringles, Cheez-It, Pop-Tarts, Kellogg’s Rice Krispies Treats, MorningStar Farms, Incogmeato, Gardenburger, Nutri-Grain, RXBAR, and Eggo.
This strategic split aims to optimize the company’s operations and market focus while maintaining the recognizable Kellogg’s brand presence on store shelves.
— NPPC discusses response to animal welfare laws after Supreme Court ruling. Following the Supreme Court’s decision not to overturn California’s Prop 12 and Massachusetts’ Question 3 animal welfare laws, officials from the National Pork Producers Council (NPPC) detailed how pork producers are navigating these regulations, which introduce new space requirements for certain animals and impact pork production and sales.
Background: The Supreme Court upheld California’s Prop 12, which imposes updated space requirements for animals such as egg-laying hens, breeding pigs, and veal calves. This law also prohibits the sale of pork from sows housed in non-compliant enclosures, effectively banning gestation crates. It applies to uncooked whole pork cuts sold in California. Massachusetts has a similar law known as Question 3.
Details: Prop 12 specifies living space requirements per animal — 24 square feet for pigs, 144 square inches for egg-laying hens and 43 square feet for veal calves. As a result, commonly used gestation crates for sows and battery cages for hens don’t meet the Prop 12 standard.
NPPC has explored legal and legislative avenues to challenge these laws but is currently focused on facilitating their smooth implementation. In Massachusetts, a legal settlement has temporarily alleviated concerns by permitting pork sales that occurred before the compliance deadline and suspending the enforcement of certain provisions.
NPPC has voiced its support for the Exposing Agricultural Trade Suppression (EATS) Act, which aims to prevent states from imposing animal welfare standards on agricultural products originating from outside their borders. However, the bill faces political opposition, with some Democrats expressing reservations. NPPC President Scott Hayes emphasized the organization’s goal of opposing state-specific regulations to avoid a fragmented market: “What we don’t want is 50 different markets to produce into, and that’s what could happen if each state comes up with their own standard.”
Producers are exercising caution when it comes to complying with Prop 12 due to uncertainties regarding whether consumers are willing to pay higher prices for compliant pork. NPPC emphasizes the importance of producer choice and extends support to those who opt for compliance. The organization does not monitor which members adhere to Prop 12 and which do not, as compliance decisions are based on individual business considerations. NPPC remains committed to advocating for both producer and consumer choice while addressing the challenges posed by these animal welfare laws.
— McDonald’s is planning to phase out its self-serve soda machines in U.S. restaurants by 2032 to create a more consistent experience for customers and staff. This decision stems from changing consumer behavior during the pandemic, with a surge in drive-thru and delivery orders and fewer people dining in. The company is adapting to this trend by redesigning restaurants with smaller or no dining areas and investing in high-tech drive-thru options. Digital sales, including app orders and partnerships with services like Uber, now account for 40% of McDonald’s total sales. A new small-format concept is called “CosMc’s,” although specific details remain undisclosed. Other fast-food chains like Chipotle, Taco Bell, and Starbucks are also exploring design innovations to meet evolving customer preferences.
HEALTH UPDATE |
— CDC advisory committee recommends new Covid-19 vaccination. The advisory committee for the U.S. Centers for Disease Control and Prevention (CDC) has issued a recommendation that suggests people aged 6 months and older should receive a new Covid-19 vaccine. This proposal is currently under review by the CDC’s director, Dr. Mandy Cohen, who will provide her own recommendation. If the process proceeds as anticipated, these updated Covid-19 vaccine shots could become accessible at clinics, pharmacies, and doctor’s offices as early as later this week.
— FDA advisory panel: Ingredient in widely used oral decongestants doesn’t work. An FDA advisory panel declared that phenylephrine, an ingredient found in widely used oral decongestants such as Benadryl, Mucinex, and Tylenol, is ineffective. This ingredient, which has been in use for nearly a century, did not undergo the rigorous clinical trials now required by regulators. Recent studies have shown that phenylephrine does not effectively relieve congestion. The unanimous vote by the advisory panel paves the way for the FDA to remove oral phenylephrine from its list of approved over-the-counter (OTC) ingredients. If this happens, products containing phenylephrine would not be permitted for sale in the United States. Companies like Kenvue (which sells Tylenol and Benadryl) and Reckitt Benckiser (which produces Mucinex) have not yet responded to requests for comment on this development.
Of note: OTC products designed for cough, sinus, and flu symptoms generated approximately $5 billion in sales in 2021, according to research firm IRI.
CONGRESS |
— House GOP launches impeachment inquiry into President Biden over allegations of wrongdoing. House Speaker Kevin McCarthy (R-Calif.) announced the House will initiate an impeachment inquiry into President Joe Biden. “These are allegations of abuse of power, obstruction and corruption,” the Speaker said on Capitol Hill. “They warrant further investigation by the House of Representatives. That’s why today I am directing our House committee to open a formal impeachment inquiry into President Joe Biden.” This move comes in response to mounting pressure from the right-wing faction within the House Republican Conference, although the Biden administration has previously dismissed impeachment as unfounded.
McCarthy sent colleagues a letter (link/pdf) Tuesday evening laying out five grounds justifying the start of an impeachment inquiry against President Joe Biden, ranging from making false statements to the American people to helping enrich his family by conducting meetings and phone calls that furthered his son’s foreign business deals as vice president.
The decision to pursue impeachment is based on allegations surrounding the business dealings of President Biden’s son, Hunter Biden, with House Republicans asserting that they have uncovered “serious and credible allegations” concerning the president’s conduct.
Of note: Opening an inquiry isn’t a vote to impeach. It isn’t clear whether McCarthy will ask the House to vote on a formal inquiry as it would put Members on record — the 18 House Republicans in districts won by Biden in 2020 will be nervous about any such vote. These swing districts will determine who holds the House majority in 2024. Former Speaker Nancy Pelosi (D-Calif.) had tried to dodge such a vote, but she later relented under criticism from Republicans.
The impeachment inquiry will be led by House Oversight and Accountability Chairman James Comer (R-Ky.), with the involvement of Judiciary Chairman Jim Jordan (R-Ohio) and Ways and Means Chairman Jason Smith (R-Mo.).
Evidence? While some House Republicans have publicized their investigations, no concrete evidence has been presented to indicate that President Biden acted at the behest of his son’s business associates. Critics argue that this inquiry lacks specific allegations of wrongdoing.
Not all Republicans are supportive of this move, with some, like Rep. Ken Buck (R-Colo.), highlighting the lack of a strong connection between Hunter Biden’s actions and the president. Critics argue that the impeachment inquiry is driven by extreme politics rather than substantive evidence.
House Democrats contrasted this impeachment inquiry with those against former President Trump, noting the overwhelming evidence in those cases. They assert that President Biden has not engaged in any wrongdoing, and this inquiry is politically motivated and unfounded.
Next step: McCarthy is addressing his conference this morning in-person for the first time since July.
Bottom line: There’s no chance the Senate would convict the President even if the House impeaches him — unless the House inquiry truly brings confirmation of wrongdoing.
— U.S. gov’t shutdown odds continue to rise. More than 30 Democrats, led by Rep. Robert Garcia (D-Calif.), sent a letter to House Speaker Kevin McCarthy (R-Calif.) asking him to figure out a bipartisan solution to prevent a shutdown when government funding runs out Sept. 30.
But McCarthy faces pushback from some of his conservative hardliners on the issue. Conservatives have pushed two big demands on McCarthy: opening an impeachment inquiry into President Joe Biden and major cuts to government spending. “The spending fight (and impeachment) are two different issues, completely different,” Rep. Ralph Norman (R-S.C.) said Tuesday afternoon, adding that McCarthy “did right on the impeachment inquiry. He did right on that.” But, he added, “I’m not going to vote for a CR.”
Rep. Bob Good (R-Va.), another member of the House Freedom Caucus, said: “Him starting an impeachment inquiry gives him no — zero — cushion, relief, brace, as it applies to spending.”
House Freedom Caucus Chair Scott Perry (R-Pa.) said his members will not vote for a stopgap funding bill, raising the chances of a gov’t shutdown at the end of the month. Perry said his members were “not interested” in any short-term extension that continues to fund federal agencies at current levels. “We’re not gonna vote for it,” Perry told reporters at a Tuesday press conference. “We’re here to put our foot down and say it stops now. The power of the purse is in the legislature.”
Freedom Caucus members want any continuing resolution (CR) to include items like increased funding for border security. But even then, they haven’t committed to supporting such a temporary funding fix.
Rep. Matt Gaetz (R-Fla.) said he is considering a motion to oust the speaker. “If Kevin McCarthy puts a continuing resolution on the floor, it’s going to be shot/chaser. Continuing resolution — motion to vacate,” Gaetz said. He did not opine on whether that statement covered a CR that included demands from conservatives, such as border security funding and disaster funding.
OTHER ITEMS OF NOTE |
— Fraudsters may have stolen up to $135 billion in federal unemployment aid during pandemic. According to a report (link) by the Government Accountability Office (GAO), it is estimated that fraudsters may have stolen as much as $135 billion in federal unemployment aid during the Covid-19 pandemic. This amount represents roughly one out of every seven dollars allocated for jobless Americans during the public health crisis.
The report criticized both the Trump and Biden administrations, as well as lawmakers, for failing to address the legal and technological vulnerabilities that enabled criminals to exploit the system. The GAO’s estimate is based on sampled federal data, acknowledging that the full extent of unemployment fraud during the pandemic may never be known with certainty.
— North Korea launched two suspected short-range ballistic missiles near Pyongyang’s main international airport, with the missiles heading towards the country’s east coast. This launch occurred just before an anticipated summit between North Korean leader Kim Jong Un and Russian President Vladimir Putin. Japan’s NHK reported that there was no evidence of any projectiles entering its exclusive economic zone.
Kim Jong Un met Putin at a rocket launch site in eastern Russia on Wednesday, in their first meeting since 2019, Russian state media reported.
The talks between Kim and Putin may focus on potential weapons deals, following their recent visits to Russia’s eastern regions. There have been allegations from the U.S. that North Korea supplied munitions to support Russia’s actions in Ukraine, which both Moscow and Pyongyang have denied.
— Calendar of events today:
Wednesday, Sept. 13
• Ag carbon markets. Bipartisan Policy Center discussion on “New Horizons for the Agricultural Carbon Market.”
• Fall legislative outlook. CQ RollCall virtual discussion on “Fall 2023 Legislative Preview: Appropriations, Farm Bill, NDAA (National Defense Appropriations Act), and Beyond.”
• Dietary guidelines. Final day of the Health and Human Services Department virtual meeting of the 2025 Dietary Guidelines Advisory Committee.
• Agriculture issues. Final day of the National Association of State Departments of Agriculture annual meeting in Wyoming, including remarks from USDA Deputy Secretary Xochitl Torres Small and USDA Undersecretary for Research, Education and Economics Chavonda Jacobs-Young and a presentation on the global agricultural outlook.
• Workforce future. Axios discussion on the “Future of the Workforce.”
• Japan issues. Center for Strategic and International Studies virtual discussion on “Coalition Building: Current Dynamics in Japanese Politics.”
• Defending Japan. Center for a New American Security virtual discussion on a new report “Strengthening the Shield: Japan’s Defense Transformation and the U.S./Japan Alliance.”
• Revitalizing the WTO. Peterson Institute for International Economics virtual discussion on “How Can the World Trade Organization (WTO) be Revitalized?”
• U.S. climate policies. Business Council for International Understanding virtual discussion on the overall strategy and direction of the Treasury Department’s climate policies, including implementation of the Inflation Reduction Act.
• Too big to fail. Better Markets 15th anniversary Lehman Collapse Conference with the theme “Can Too Big to Fail Be Ended: And, if so, How?” Securities and Exchange Commission Chair Gary Gensler, delivers remarks on “A Market Regulator’s View of Too-Big-To-Fail” and Consumer Financial Protection Bureau Director Rohit Chopra delivers keynote remarks on “Too-Big-To-Fail from a Financial Consumer’s Point of View.”
• Biological issues. National Science Foundation; Advisory Committee For Biological Sciences virtual meeting of the Advisory Committee for Biological Sciences; runs through Thursday.
• Small business growth. House Small Business Economic Growth, Tax and Capital Access Subcommittee hearing on “Enabling Success: Examining the Competitive Landscape for Small Businesses.”
• Automated motor vehicles. House Transportation and Infrastructure Highways and Transit Subcommittee hearing on “The Future of Automated Commercial Motor Vehicles: Impacts on Society, the Supply Chain, and US Economic Leadership.”
• LIV-PGA. Senate Homeland Security and Governmental Affairs Investigations Subcommittee hearing on “The PGA Tour-LIV Deal: Examining the Saudi Arabian Public Investment Fund’s Investments in the United States.”
• Extreme heat and transportation. Senate Environment and Public Works Committee hearing on “Effects of Extreme Heat on the Transportation Sector.”
• Electricity reliability. House Energy and Commerce Energy, Climate, and Grid Security Subcommittee hearing on “Keeping the Lights On: Enhancing Reliability and Efficiency to Power American Homes.”
• CFIUS oversight. House Financial Services Committee hearing on “Oversight of the Committee on Foreign Investment in the United States (CFIUS) and Other Efforts to Strengthen National Security in the United States.”
• Immigration. Senate Budget Committee hearing on “Unlocking America’s Potential: How Immigration Fuels Economic Growth and Our Competitive Advantage.”
• Blinken remarks. Johns Hopkins University Paul H. Nitze School of Advanced International Studies Brzezinski Lecture Series event with Secretary of State Antony Blinken.
• U.S. border situation. House Homeland Security Committee hearing on “An Unbearable Price: The Devastating Human Costs of the Biden-Mayorkas Border Crisis.”
• Immigration and the U.S. workforce. House Education and the Workforce Health, Employment, Labor, and Pensions Subcommittee hearing on “The Impact of Biden’s Open Border on the American Workforce.”
• Critical minerals. House Natural Resources Energy and Mineral Resources hearing on “Examining the Methodology and Structure of the US Geological Survey’s Critical Minerals List.”
• Global economic climate. Brookings Institution discussion on “Navigating a Challenging and Uncertain Global Economic Climate.”
• Russia after Putin. Wilson Center Kennan Institute for Advanced Russian Studies discussion on “Scenarios for Post-Putin Russia.”
• Supreme Court preview. Smithsonian Associates virtual discussion on “The Supreme Court: A Preview of the New Term.”
• Economic reports. CPI | Atlanta Fed Business Inflation Expectations | Treasury Budget
• Energy reports. EIA Petroleum Status Report | Weekly Ethanol Production | Genscape weekly crude inventory report | IEA monthly Oil Market Report | CPC loading program (October) | Earnings: Tullow Oil.
• USDA reports. ERS: Season-Average Price Forecasts | Feed Grains Database | Meat Price Spreads | Wheat Data | Dairy Data NASS: Broiler Hatchery | Turkey Hatchery
KEY LINKS |
WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | Student loan forgiveness | Russia/Ukraine war, lessons learned | Russia/Ukraine war timeline | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | China outlook | Omnibus spending package | Gov’t payments to farmers by program | Farmer working capital | USDA ag outlook forum | Debt-limit/budget package |