Harris Takes Questions, But Did She Provide Answers in ‘Bob-and-Weave’ Strategy?

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August 30, 2024 08:18 AM

News/Markets/Policy Updates: Aug. 30, 2024

— Kamala Harris defends policy shifts in interview, says values unchanged. Highlights:

• Harris responded to criticism of the economy under the Biden administration but says she has “more to do” if she wins the White House. Harris was asked about her economic platform considering criticism the Biden administration has faced for inflation, including rising grocery and housing prices, with CNN anchor Dana Bash noting there are voters who would like to “go back” to when prices were lower under the Trump administration. The vice president defended her work with President Joe Biden, saying they had to work to “recover” the economy in the midst of the pandemic and touting achievements during the administration, like falling inflation in recent months.“ There’s more to do, but that’s good work,” Harris said, as she touted aspects of her economic platform that go beyond Biden’s positions, including more aggressive actions on addressing housing affordability and a pledge to go after price gouging.

• Harris answered one of Trump’s biggest critiques, why she hasn’t fulfilled her campaign promises over the last 3½ years, while sitting in the vice president’s office. “First of all, we had to recover as an economy,” she said after discussing Trump’s handling of the Covid-19 pandemic when he was president. She pointed out that inflation has been brought down below 3% but acknowledged that prices are still too high for many Americans. Inflation is a top concern of voters, according to polls. She acknowledged the hardship and has promised to do more, even as she defends the administration’s economic record. She also went on offense, pointing out that the Biden administration has capped prices on insulin and other prescription drugs for senior citizens. Trump made the same promise, she said. “Never happened,” she said. “We did it.”

• The vice president said her “day one” priority if elected would be to start implementing her economic agenda — which she’s described as an “opportunity economy” — saying one of her “highest priorities is to do what we can to support and strengthen the middle class… People are ready for a new way forward,” Harris said.

• Harris insisted that her “values have not changed” even as some of her policies on issues including energy and immigration had evolved significantly in her first sit-down interview since becoming the Democratic presidential nominee. “I think the most important and most significant aspect of my policy perspective and decisions is my values have not changed,” Harris said. The Wall Street Journal in an editorial said Harris’ comments were “a studied wink to her left flank that she’s on their side but can’t say so clearly until she’s elected.”

• But, Harris acknowledged, she had adopted feedback from “traveling the country extensively” as vice president — leading to some of the significant policy changes from her 2020 presidential campaign. “I believe it is important to build consensus, and it is important to find a common place of understanding of where we can actually solve problems,” she said.

• On whether she now favors a ban on fracking for oil and gas as she did in 2019, Harris said she had changed her position by 2020 and hasn’t changed since, a response that surprised most observers. Harris said she had made clear in 2020 that she wouldn’t ban fracking. That year, she said in the vice-presidential debate that she agreed with Biden’s energy plan, which didn’t include a fracking ban. She is now convinced that the U.S. can meet all of its climate goals without a fracking ban, which would play poorly in Pennsylvania.

• “You mentioned the Green New Deal. I have always believed – and I have worked on it – that the climate crisis is real, that it is an urgent matter to which we should apply metrics that include holding ourselves to deadlines around time,” Harris said. She was not asked about the feasibility and costs of such metrics and deadlines.

• Harris said she was hoping to be a president for “all Americans” — and would look to appoint a Republican to her Cabinet as a signal she was pursuing bipartisan consensus. Harris said she did not have a particular person in mind. “I have spent my career inviting diversity of opinion,” Harris said. “I think it’s important to have people at the table when some of the most important decisions are being made that have different views, different experiences. And I think it would be to the benefit of the American public to have a member of my Cabinet who was a Republican.”

• Asked about immigration, Harris pointed to her credentials as a former California attorney general who had prosecuted transnational criminal organizations who trafficked guns, drugs and human beings. “We have laws that have to be followed and enforced that address and deal with people who cross our border illegally, and there should be consequences,” Harris said.

• Harris committed to passing a bipartisan border bill that she said former President Donald Trump helped kill, responding to criticism after unlawful border crossings spiked in the early years of Biden’s presidency. Harris has faced backlash on that topic because Biden tasked her with working on the root causes of the migration surge in Central America — a role she touted, saying her work had led to a decrease in unlawful migration from the region.

• She spoke about the Israel-Hamas war and did not commit to doing anything differently to handle the conflict than Biden has done, telling Bash she is committed to reaching a ceasefire deal. “I am unequivocal and unwavering in my commitment to Israel’s defense, and its ability to defend itself, and that is not going to change,” Harris said, noting she believes Israel has the right to defend itself after the Oct. 7 attack, as the U.S. would.

•The vice president was complimentary of Biden during the CNN interview, describing her phone call with Biden in which he said he was dropping out, in which Harris asked Biden, “Are you sure?” Harris said Biden was clear during their phone call that he would endorse her as his successor.

• The vice president defended the president’s ability to serve despite concerns about his mental fitness, telling Bash, “He has the intelligence, the commitment and the judgment, and disposition, that I think the American people rightly deserve in their president. By contrast, the former president has none of that.”

• Harris took some of Trump’s criticism head on, including his assertion earlier this year at a conference for Black journalists that she had only embraced her Black heritage for political purposes. “Same old, tired playbook,” Harris said. Harris used the interview to develop her core attack on Trump’s character and conduct, which is the foundation of the case she’s making to voters. “I think sadly, in the last decade, we have had in the former president someone who has really been pushing an agenda and an environment that is about diminishing the character and strength of who we are as Americans, really dividing our nation,” Harris said. She suggested it was Trump who has been the dominant force in American politics. “I’m talking about an era that started about a decade ago,” she said, “where there is some suggestion, warped I believe it to be, that the measure of the strength of a leader is based on you beat down instead of where I believe most Americans are, which is to believe that the true measure of the strength of a leader is based on who you lift up.”

• Bottom line: Harris is clearly trying to move toward the center on various topics, at least in her comments. A Bloomberg article described Harris’s remarks as “a bob-and-weave strategy she has employed since Joe Biden dropped out of the race in July.” She preferred sweeping themes and aspirations rather than detailed policy blueprints and declined to fully explain reversals on issues like immigration and energy. She also did not say how she’d pay for her programs. Harris sometimes came across as evasive.

— Democratic VP candidate Tim Walz addressed his misstatement that he had carried weapons “in war,” saying his “grammar” is sometimes incorrect. Walz said he was proud of his service. “I think people are getting to know me,” he said. “I wear my emotions on my sleeves, and I speak especially passionately about our children being shot in schools and around guns. So I think people know me. They know who I am.” Of other missteps, he said, “I certainly own my mistakes when I make them.”

— Donald Trump on Thursday pledged universal healthcare coverage for in vitro fertilization treatments. “Your government will pay for — or your insurance company will be mandated to pay for — all costs associated with IVF treatment… because we want more babies, to put it nicely,” Trump said in a Michigan speech that underscored his challenges winning over women as Democrats rally around reproductive access. rump may have trouble selling the plan to Republicans, who usually balk at coverage mandates. In June, GOP senators blocked a bill that would require insurance coverage for IVF treatments — which comprise about 2.5% of births — that typically cost at least $15,000 per cycle. Sens. Susan Collins and Lisa Murkowski were the only Republican supporters.

The treatment was thrust into the spotlight when Alabama’s Supreme Court ruled in February that embryos created using IVF counted as children under state law, causing the temporary closure of fertility clinics. The Harris campaign dismissed Trump’s promise, saying he “lies as much if not more than he breathes.”

— In an interview with NBC News, Trump was asked about his stance on abortion — particularly in his home state of Florida, where there’s an initiative on the November ballot to increase the time limit for abortions. Right now, abortion is banned in Florida after six weeks of pregnancy in most cases. “I think the six week is too short. It has to be more time. And so — and I’ve told them that I want more weeks,” he said. “I’m voting that — I’m going to be voting that we need more than six weeks.” Trump has gone back and forth on his stance on abortion, but his current position is that the issue should be up to the states.

— The food industry has a plan to push back on Kamala Harris’ plan to bar price gouging for groceries. In a memo sent to Congressional offices, the National Grocers Association, which represents family-owned grocery chains, argues they’re the ones getting squeezed. “The real culprit is skyrocketing overhead costs which get passed on to consumers in tight margin environments,” it said, noting independent grocers scraped by 1.4% margins in 2023. Supporters of the plan are unlikely to be deterred.

— New York Post: ABC News rejects Kamala Harris’ last-minute bid to change Trump debate rules, will keep muted mics. ABC News has declined to adopt Vice President Kamala Harris’ request to have wholly unmuted microphones during her Sept. 10 debate with former President Donald Trump — after days of wrangling over what Republicans viewed as Democratic attempts to lay a trap for the GOP nominee. A network email reviewed by the New York Post lays out similar rules as those for Trump’s June 27 CNN debate against President Biden — including no audience, no pre-written notes or props and muted mics when a candidate is not speaking. Trump and Harris will be standing on stage and will only be allowed to have a pen, a pad of paper and a bottle of water.

MARKET FOCUS

— Labor Day schedule: Grain and livestock markets will trade normal hours today ahead of the extended holiday weekend. All markets and gov’t offices are closed on Monday, Sept. 2, for Labor Day. Grain markets resume trade on Monday, Sept. 2, at 7:00 p.m. CT with the overnight session. Livestock markets reopen at 8:30 a.m. CT on Tuesday, Sept. 3. Have a happy and safe holiday weekend.

— Equities today: Asian and European stock indexes were mostly up overnight. U.S. stock indexes are pointed to higher openings. In Asia, Japan +0.7%. Hong Kong +1.1%. China +0.7%. India +0.3%. In Europe, at midday, London +0.3%. Paris +0.5%. Frankfurt +0.3%. The primary Federal Reserve inflation gauge showed that price pressures continued to moderate in July.

U.S. equities yesterday: The Dow reached a record high, closing at 41,335.05 points, marking a gain of 243.63 points or 0.59%. The S&P 500 closed down 0.22 point, at 5,591.96. The Nasdaq closed down 39.60 points, -0.23%, at 17,516.43.

For the month, both the S&P and Dow are up about 1.2%. The tech-heavy Nasdaq Composite is down almost 0.5%. A down August for the Nasdaq would mark back-to-back monthly losses for the index.

— Oil prices rose by more than a dollar per barrel on Thursday due to supply disruptions in Libya and planned output cuts in Iraq, raising concerns about tighter global supplies. Iraq also plans to cut its oil output in September to between 3.85 million and 3.9 million barrels per day to meet OPEC quotas. Brent crude increased by $1.29 (1.6%) to $79.94 a barrel, while U.S. West Texas Intermediate (WTI) rose $1.39 (1.9%) to $75.91 a barrel. More than half of Libya’s oil production, about 700,000 barrels per day, was offline due to a political standoff.

— Ag markets today: The corn and soybean markets extended Thursday’s corrective gains during overnight trade, while wheat futures pivoted around unchanged. As of 7:30 a.m. ET, corn futures were trading fractionally to 2 cents higher, soybeans were 7 to 9 cents higher and wheat futures were trading fractionally on either side of unchanged. The U.S. dollar index and front-month crude oil futures were both marginally higher this morning.

Cash cattle trade lower. Cash cattle trade got underway at mostly $1.00 to $2.00 lower prices on Wednesday and Thursday. While sales activity was light, that sets a weaker tone for cash cattle prices for a fifth consecutive week.

Discount narrows in October hog futures. October lean hog futures continued to strengthen on Thursday, despite ongoing seasonal weakness in the cash index. The CME lean hog index is down another 41 cents to $87.04 as of Aug. 28. October hogs finished Thursday $4.865 below today’s cash quote, which is less than the five-year average decline of $7.28 from now until mid-October.

— Agriculture markets yesterday:

• Corn: December corn futures climbed 5 1/4 cents to $3.96 and settled on session highs.
• Soy complex: November soybeans rose 15 1/2 cents to $9.92 1/2, near the session high and hit a nearly three-week high. December soybean meal closed up $2.60 at $310.90, near mid-range and hit a three-week high. December soybean oil rose 141 points to 42.13 cents, near the session high and hit a four-week high.
• Wheat: December SRW futures rallied 7 1/4 cents to $5.48 3/5 and closed near session highs. December HRW futures climbed 4 3/4 cents to $5.60 1/2, on session highs. December HRS futures rose 6 3/4 cents to $5.90 1/2.
• Cotton: Futures posted an impressive rebound from Wednesday’s losses, with most-active December futures surging 137 cents to 69.92 cents.
• Cattle: October live cattle fell 72 1/2 cents to $177.90 and nearer the session low. October feeder cattle closed down $1.90 at $236.675 and nearer the daily low.
• Hogs: Nearby October futures rose 50 cents to $82.175. Both cash hog and wholesale pork prices are declining this week.

— Quotes of note:

• “China sells to us but doesn’t buy from us and that’s not reciprocal trade.” — Mexican Finance Minister Rogelio Ramírez de la O. He has expressed concerns about this imbalance, suggesting that it negatively impacts Mexico’s economy and that there is a need to re-evaluate trade policies to protect domestic interests. He also pointed out that China’s expansion in international trade, particularly since joining the World Trade Organization in 2001, has come at the expense of North American countries, including Mexico. This has led to increased dependence on Chinese imports across the region, with Mexico relying on China for 19.6% of its imports. The Mexican Finance Minister’s comments echo broader concerns about trade imbalances with China, similar to those expressed by the United States. Both countries are considering measures to address these imbalances, including changes in investment policies and efforts to reduce dependence on Chinese imports.

• UBS: U.S. high-yield credit in autos, aerospace, and energy sectors may underperform if Harris wins election. UBS Global Research strategists predict that U.S. high-yield credit in the autos, aerospace, and energy sectors could underperform if Kamala Harris wins the U.S. election, citing a less supportive agenda for defense spending and tighter regulations on energy production. The autos sector may also face challenges due to the shift toward less profitable electric vehicles. Conversely, investment-grade bonds in basic industry, capital goods, and utilities are expected to outperform, benefiting from the continuation of Biden-era policies like the Inflation Reduction Act.

• China pauses brandy tariffs, but European spirits firms still face uncertainty. China’s temporary halt on dumping measures against European Union brandy imports offers some relief, but the threat of tariffs remains, according to Stifel analyst Cedric Lecasble. The Chinese commerce ministry has suspended punitive actions but maintains that brandy imports have harmed local producers. The ongoing investigation, which began in January, could lead to a final decision by early 2025, keeping the risk of tariffs alive. Following the announcement, shares in Pernod Ricard and Remy Cointreau rose by 2.8% and 4.2%, respectively, while Davide Campari-Milano and Diageo saw smaller gains.

— U.S. core PCE inflation rises 0.2% in July, bolstering case for Fed rate cuts. The U.S. core PCE price index, the Federal Reserve’s preferred measure of underlying inflation, increased by 0.2% in July 2024, meeting market expectations. On a year-over-year basis, core PCE prices rose by 2.6%, slightly below the anticipated 2.7%. This moderate inflation data supports the case for the Federal Reserve to begin cutting interest rates as it aims to manage economic growth and price stability.

Personal income rose 0.3%, above 0.2% forecasts. Personal consumption expenditures climbed 0.5% in July, matching estimates of a strong spending month.

The figures come after Fed chair Jay Powell said last week that the “time has come” to begin cutting rates as inflation eases and the labor market slows.

U.S. gov’t bond prices were little changed following the publication of the data. The yield on the two-year Treasury note, which rises when prices fall, was up 0.03 percentage points on the day, at 3.93%.

— Eurozone inflation hits three-year low at 2.2% as energy costs drop; ECB rate cut expected. Inflation in the Eurozone fell to a three-year low of 2.2% in August 2024, down from 2.6% in July, primarily due to a 3.0% decrease in energy costs. Despite the overall drop, services inflation surged to a ten-month high of 4.2%, driven by higher accommodation and transport prices, particularly in France during the Olympics. The decline in headline inflation brings it closer to the European Central Bank’s (ECB) 2% target, raising expectations of a potential interest rate cut in September. However, core inflation, which excludes energy and other volatile items, remains stubbornly high at 2.8%, signaling persistent domestic inflation pressures. The ECB’s upcoming decision will need to balance these factors as it considers adjusting its monetary policy.

Market perspectives:

— Outside markets: The U.S. dollar index was little changed, with the euro, yen and British pound all stronger against the greenback. The yield on the 10-year U.S. Treasury note fell slightly, trading around 3.86%, with a mixed-to-negative tone in global government bond yields. Crude oil futures were down. with US crude around $75.75 per barrel and Brent around $78.75 per barrel. Gold and silver futures were lower, with gold at around $2,555 per troy ounce and silver at around $29.98 per troy ounce.

— Dockworkers’ union at impasse with employers, strike looms at major U.S. ports. The union representing dockworkers from Maine to Texas reports being “at an impasse” with employers as negotiations for a new labor contract stall, raising the threat of a strike at some of the largest U.S. ports. The International Longshoremen’s Association (ILA) is demanding a 77% wage increase over six years, significantly higher than the 32% won by West Coast dockworkers last year. Despite the high stakes, formal negotiations have yet to begin. With the current contract set to expire on Sept. 30, concerns are growing among shipping customers about the potential disruption.

— USDA daily export sales for delivery in 2024-25 marketing year:
• 132,000 MT soybeans to China
• 100,000 MT soybean cake and meal to Colombia

— Indonesia wants to fulfill rice import quota. Indonesia seeks to import another 900,000 metric tons of rice until the end of this year amid expectations of lower output and delayed planting season, the country’s food procurement company Bulog said. As of Aug. 30, Bulog has contracted 2.7 MMT of rice imports of the allocated quota of 3.6 MMT for this year.

— Global sugar deficit to swell in 2024-25. In its first outlook for 2024-25 (October-September), the International Sugar Organization (ISO) forecast there would be a global sugar deficit of 3.58 MMT. ISO sharply reduced its forecast for the 2023-24 deficit to 200,000 MT from 2.95 MMT in its June update, noting Brazil’s center-south region “shifted more output into the pre-October window,” which will leave 2024-25 with a larger deficit.

— India allows ethanol production from cane juice, other food products. India will allow sugar mills to use cane juice or syrup to produce ethanol in the new marketing year starting Nov. 1, the government said. The world’s second-biggest sugar producer imposed restrictions on diverting sugar for ethanol production in December 2023 to increase sugar output after cane crop was hit by below-average monsoon rains. Distilleries can also use B-heavy molasses, a byproduct with higher sucrose levels, for ethanol production and will be allowed to purchase up to 2.3 MMT of rice from the state-run Food Corporation of India for ethanol production.

— U.S. crop insurance helps shield farmers amid global challenges, as Argentina faces potential acreage reductions or crop shifts. Historically, when there was an oversupply of crop acres globally, the United States often addressed the issue by implementing set-aside programs. These programs encouraged farmers to leave a portion of their land unplanted, thereby reducing overall production and helping to stabilize prices. This approach allowed other grain-exporting countries to continue planting extensively without needing to cut back on acres, as U.S. measures helped keep global prices at sustainable levels. But there are no more U.S. acreage idling programs like those in the past.

In recent times, the U.S. crop insurance program has provided a safety net for American farmers. This program, subsidized by taxpayers, helps protect farmers from financial losses due to poor harvests or declines in market prices. This safety net is particularly significant for the 2024-25 crop year, as it offers U.S. farmers a level of price security that may not be available to their counterparts in other major grain-exporting countries.

The U.S. crop insurance program, primarily managed through the Federal Crop Insurance Corporation (FCIC) and USDA’s Risk Management Agency, is one of the most comprehensive and subsidized in the world. USDA partners with private insurance companies to offer a range of insurance products to farmers, covering various risks such as yield losses and revenue declines. The federal government subsidizes around 60% of the insurance premiums.

In comparison, other major grain-producing countries have less comprehensive and less subsidized crop insurance systems. For example, in Latin America, countries like Argentina and Brazil have attempted to introduce various agricultural insurance products, including weather index-based insurance and area-yield index-based insurance. However, these programs have faced challenges such as low demand and insufficient market infrastructure, leading to limited adoption and coverage. Additionally, crop insurance in these regions often lacks the extensive government support seen in the U.S., resulting in lower penetration rates and less financial protection for farmers.

Farmers in other countries, such as Argentina, are facing challenges that could lead to a reduction in planted acres. In Argentina, for example, the corn sector is grappling with a severe leafhopper infestation, exacerbated by climate change, which has significantly impacted corn yields. This situation, combined with lower market prices, has led some Argentine farmers to consider reducing corn acreage by up to 20% and shifting to soybeans, despite the export tax that reduces the price farmers receive for soybeans.

Despite these challenges, the market currently anticipates that farmers in grain-exporting countries will plant all available acres. However, the situation in Argentina serves as a crucial test case. The decision to switch from corn to soybeans is influenced by the relative profitability of these crops and the specific challenges faced, such as pest infestations and export taxes. As such, the global agricultural landscape remains dynamic, with farmers continuously adapting their strategies in response to economic and environmental pressures.

— Ag trade update: Taiwan purchased 65,000 MT of corn expected to be sourced from Brazil.

— NWS outlook: Widespread shower and thunderstorm chances from the Plains to East Coast to start the holiday weekend, producing heavy rain and severe weather... ...Heavy rain and scattered flash flooding possible along the Louisiana and upper Texas Gulf Coasts... ...Record heat continues across the Ohio/Tennessee Valleys into the Southern Appalachians today with relief on tap for the weekend... ...Much above average temperatures build across the Pacific Northwest, northern Great Basin and into the northern Rockies.

— Items in Pro Farmer’s First Thing Today include:

• Followthrough buying in soybeans and corn overnight, wheat mixed
• PBOC starts trading gov’t bonds to stabilize market
• China to launch FX derivative

RUSSIA/UKRAINE

— Kyiv’s military said it had struck two oil depots inside Russia, pressing ahead with a campaign of attacks against the energy sector.

CHINA UPDATE

— China considers $5.4 trillion mortgage refinancing to boost economy amid property slump. China is exploring a plan to allow homeowners to refinance up to $5.4 trillion in mortgages to lower borrowing costs and stimulate consumption, Bloomberg reports (link). The proposal would enable homeowners to renegotiate mortgage terms with their current lenders or switch banks, a first since the global financial crisis. While the move could reduce mortgage rates and ease financial burdens for millions, it may squeeze profitability for state-run banks. The plan is seen as a significant step to counteract the ongoing property market slump, which has dampened economic growth and consumer spending. The market responded positively, with Chinese developers’ stocks surging and the yuan strengthening. However, concerns about China missing its 2024 growth target persist, reflecting broader economic challenges.

— China’s PBoC buys 100 billion yuan in bonds to stabilize market amid economic slowdown. China’s central bank, the People’s Bank of China (PBoC), has purchased a net 100 billion yuan in Treasury bonds as part of a strategy to manage liquidity and stabilize the financial system amid economic challenges. Facing an economic slowdown, the PBoC is lowering interest rates to stimulate activity, but concerns about a potential bond market bubble due to increased demand and low yields persist. The bond purchases aim to balance supply and demand, preventing excessive rallies and maintaining financial stability as other investment opportunities remain limited.

— China to continue with low-carbon reforms. China will keep phasing out fossil fuels and reforming its electricity system, the energy regulator said, issuing a white paper long on listing accomplishments but short on new plans for China’s energy transition. National Energy Administration head Zhang Jianhua said China would continue to reform its electricity system, expand the spot market, promote green electricity trading and replace fossil fuels with renewable energy. He also called for market-oriented reforms.

ENERGY & CLIMATE CHANGE

— A reader asks: “Have you heard any comments either way out of Canada regarding their potential adoption of the CARB cap seeing as it seems that they have been following California policy so far?”

As of now, Canada has not made any explicit comments about adopting California’s Cap-and-Trade Program (CARB cap). However, there are several indicators of Canada’s interest in similar environmental initiatives and collaborations with California.

• Existing collaborations and partnerships: Canada and California have a history of collaboration on environmental issues. They have signed a Memorandum of Cooperation to advance climate action and biodiversity conservation, which includes sharing expertise and policy measures to reduce emissions. This partnership reflects a mutual interest in addressing climate change through collaborative efforts.

• Canada’s emissions cap framework: Canada has introduced its own framework to cap greenhouse gas emissions from the oil and gas sector, aiming to reduce emissions while remaining competitive globally. This framework is part of Canada’s broader 2030 Emissions Reduction Plan, which includes a sector-by-sector roadmap to cut emissions by 40-45% below 2005 levels by 2030. This approach aligns with the principles of cap-and-trade systems, although it is not directly linked to California’s system.

• Québec’s Cap-and-Trade linkage with California: Québec, a Canadian province, has already linked its Cap-and-Trade Program with California’s since 2014. This linkage allows for joint auctions and market monitoring, demonstrating a successful model of cross-border cooperation in carbon trading. Québec’s involvement suggests that Canada is open to adopting similar market-based mechanisms at a provincial level.

Bottom line: One Canadian contact says, “I haven’t heard anything about Canada formally linking with California. Quebec did with cap and trade, and Ontario was going to, but premier Doug Ford cancelled that.” So while Canada has not officially announced plans to adopt California’s Cap-and-Trade Program, its ongoing collaborations with California and its own emissions reduction initiatives indicate a willingness to pursue similar environmental policies. The existing linkage between Québec and California further exemplifies the potential for Canada to align more closely with California’s cap-and-trade strategies in the future.

— ASA criticizes CARB’s proposed limits on soy-based biofuels in LCFS comments. The American Soybean Association (ASA) submitted critical comments to the California Air Resources Board (CARB) regarding proposed changes to the Low Carbon Fuel Standard (LCFS). The ASA expressed deep concern over measures such as capping soybean and canola oil use in biofuels and imposing burdensome sustainability requirements, arguing that these changes lack scientific justification and could harm soy-based biofuel production. The ASA is actively pushing back against these proposals and remains committed to collaborating with CARB to support soy-based biofuels.

— EPA has extended an emergency fuel waiver for the states of Illinois, Indiana, Michigan, and Wisconsin until Sept. 15, 2024. This extension allows these states to switch to winter gasoline earlier than usual without reverting to summer gasoline, addressing fuel shortages caused by the outage of ExxonMobil’s refinery in Joliet, Illinois. The Joliet refinery experienced a three-week shutdown due to a power outage caused by severe weather, including tornadoes, in mid-July 2024. This refinery, which produces approximately 9 million gallons of gasoline and diesel daily, is a significant supplier to the region. The shutdown created a fuel supply emergency, prompting the EPA to issue the initial waiver.

The waiver temporarily suspends federal regulations that require the sale of low Reid Vapor Pressure (RVP) gasoline during the summer months. Low RVP gasoline is less prone to evaporation, which helps reduce ozone pollution and smog. By allowing a switch to winter gasoline, which has a higher RVP and is cheaper to produce, the waiver aims to alleviate fuel shortages and stabilize prices in the affected states.

— South Korean court orders stronger climate action, citing rights of future generations. In a historic ruling, South Korea’s Constitutional Court deemed the country’s current climate measures insufficient, ordering the government to set firm carbon-reduction targets for 2031 and beyond. The court ruled that the lack of specific mid- and long-term targets violates the constitutional rights of future generations. The decision follows complaints by over 250 plaintiffs, many of them children, who argued that the government’s goals were too weak to combat climate change effectively. This ruling marks the first climate litigation victory in Asia and could inspire similar actions across the continent.

LIVESTOCK, NUTRITION & FOOD INDUSTRY

— Boar’s Head plant in Virginia linked to deadly listeria outbreak amid serious sanitation violations. The Boar’s Head deli meat plant in Jarratt, Virginia, is embroiled in a major food safety scandal following a deadly Listeria outbreak linked to repeated violations of federal regulations. USDA documented 69 noncompliance instances over the past year, including severe sanitation issues like mold, insects, and meat residues on equipment. The outbreak, which has caused nine deaths and hospitalized 50 people across 18 states, has been traced back to Boar’s Head liverwurst. Despite the plant’s serious sanitation failures, no enforcement actions were taken by USDA. In response, Boar’s Head has recalled over 7 million pounds of products and suspended operations at the plant while addressing the issues.

— Butterball settles wage-fixing lawsuit alongside other poultry processors. Butterball LLC has settled a class action lawsuit accusing poultry processors of wage-fixing, joining companies like Jennie-O Turkey Store, Koch Foods, and Tyson Foods in resolving the case. The settlement terms were not disclosed and are pending court approval. The lawsuit, originally filed in 2019, alleged that the companies conspired to suppress wages, violating the Sherman Act. Other settlements in the case have included significant payouts from Pilgrim’s Pride, Perdue Farms, and others.

— Pork and beef producers in developed markets face credit downgrade risks due to climate policies, Fitch warns. Fitch Ratings warns that pork and beef producers in developed markets are increasingly vulnerable to credit downgrades due to rising costs from stricter climate policies and the need for new technologies. Emerging markets, however, remain less affected due to stable demand and delayed climate policy implementation. The beef industry also faces challenges from shrinking demand driven by population decline, health concerns, and climate targets. Fitch estimates that one in five corporate issuers could be at risk of downgrades by 2035 due to climate-related vulnerabilities.

POLITICS & ELECTIONS

— Cook Political Report rating changes this week:

ELECTORAL COLLEGE:
• Minnesota (10): Lean D to Likely D
• New Hampshire (4): Lean D to Likely D
• North Carolina (16): Lean R to Toss Up

GOVERNORS:
• North Carolina: Toss Up to Lean D
• Washington: Lean D to Likely D

— What if there is no Electoral College winner? If the Electoral College results in a tie, with each presidential candidate receiving 269 votes, the election is decided by a process outlined in the 12th Amendment of the U.S. Constitution. This process involves both the House of Representatives and the Senate, each playing distinct roles in electing the President and Vice President, respectively.

Presidential election
• The newly elected House of Representatives: The responsibility of electing the President falls to the House of Representatives. In this scenario, each state delegation in the House casts one vote to decide the President. A candidate must receive a majority of the states’ votes, which means at least 26 out of 50, to win. The voting is done among the top three candidates who received the most electoral votes. This process continues until a candidate secures the majority. As of the latest data, Republicans hold a slight edge in state delegations, controlling 26, while Democrats control 23, with one state split. This configuration could give Republicans an advantage in a House vote. The last time the House decided a presidential election was in 1824 (see related item).
Of note: If the House of Representatives has to decide the presidency due to no candidate receiving a majority of the electoral votes, it is the new House, elected in the most recent elections, that would make the decision. This is specified by the Twentieth Amendment, which set the new congressional term to start on Jan. 3, prior to the presidential inauguration on Jan. 20. Therefore, in the event of a contingent election for the 2024 presidential race, the House elected in the 2024 elections would be responsible for selecting the president.

Vice Presidential election
• Senate: The newly elected Senate is tasked with electing the Vice President. Senators vote individually, and a candidate must receive a majority of the Senate’s votes, which is at least 51 out of 100, to be elected. The voting is limited to the top two vice-presidential candidates based on electoral votes. This process, known as a contingent election, has only been used once in U.S. history, in 1837, when the Senate elected Richard Mentor Johnson as Vice President. As noted, any contingent election for Vice President would be conducted by the incoming Senate, not the outgoing one.

Of note:
• Faithless electors: Before the contingent election process, there is a possibility that “faithless electors” could alter the outcome. These are electors who do not vote for the candidate they pledged to support. This could potentially break a tie if electors switch their votes.
• Acting president: If the House has not elected a President by Inauguration Day (Jan. 20), the Vice President-elect becomes the acting President until the House resolves the tie. If neither a President nor a Vice President is elected, the Presidential Succession Act provides that the Speaker of the House would serve as acting President. This process ensures that even in the event of an Electoral College tie, there is a constitutional mechanism to determine the leadership of the country.

— How to get to 269 to 269 Electoral Votes. If Kamala Harris wins the “Blue Wall” battleground states (Michigan, Wisconsin, Pennsylvania) but Donald Trump wins the “Sun Belt” battlegrounds (Arizona, Georgia, Nevada, and North Carolina) and Nebraska’s 2nd congressional district, we’d be in a 269-269 situation. FiveThirtyEight’s model currently pegs the odds of that happening at less than 1%, but that’s because the model says Harris is heavily favored (75% odds) to win Nebraska’s 2nd.
Of note: The Hill’s Election Center indicates that there is a 0.4% chance of a 269-269 tie based on their simulations.

— Electoral College ties have occurred twice in U.S. history:

• Election of 1800: This election resulted in a tie between Thomas Jefferson and Aaron Burr, each receiving 73 electoral votes. At that time, electors cast two votes without distinguishing between president and vice president, leading to the tie. The decision was made by the House of Representatives, which eventually elected Jefferson as president after 36 ballots.

• Election of 1824: Although not a tie, this election did not result in a majority winner in the Electoral College. Andrew Jackson received the most electoral votes, but not a majority, leading to a contingent election in the House of Representatives. The House chose John Quincy Adams as president, despite Jackson having more electoral and popular votes.

— Nebraska’s 2nd Congressional District is unique for several reasons, particularly in the context of Nebraska’s overall political landscape. Here are the key differences that make this district stand out:

• Electoral vote distribution
One of the most distinctive features of Nebraska’s 2nd District is its role in the state’s electoral vote distribution. Nebraska, along with Maine, is one of only two states in the U.S. that splits its electoral votes by congressional district rather than using a winner-takes-all approach. This means that the 2nd District can award its own electoral vote independently of the rest of the state, which has historically provided opportunities for Democratic candidates to win an electoral vote in an otherwise Republican-dominated state. For instance, Barack Obama won the district’s electoral vote in 2008, and Joe Biden did so in 2020.
• Political competitiveness
The district is known for its political competitiveness, often referred to as a “swing district.” Unlike the rest of Nebraska, which is predominantly Republican, the 2nd District has a more balanced mix of Republican and Democratic voters. This has resulted in closely contested elections and a Cook Partisan Voting Index (CPVI) rating of EVEN, indicating that the district’s voting patterns closely mirror the national average. This competitiveness is reflected in its history of electing both Republican and Democratic representatives to Congress.
• Demographics and urban influence
The 2nd District encompasses Omaha, the largest city in Nebraska, and parts of Douglas and Sarpy counties. This urban setting contributes to its diverse demographic profile, which includes a mix of rural conservatives, wealthy suburbanites, and a younger, more diverse urban population. Such diversity contributes to the district’s status as a political battleground.

Says a Nebraska native: “It’s a spot of purple in the sea of red! I should say an island of purple. Omaha also has the big Jesuit school of Creighton, Warren Buffett, and his politics. The University of Nebraska Medcenter. With those and Boys Town… really focused on society issues.”

OTHER ITEMS OF NOTE

— Cotton AWP moves higher. The Adjusted World Price (AWP) for cotton rose to 56.98 cents per pound, effective today (Aug. 30), up from 55.90 cents per pound the prior week. Meanwhile, USDA announced Special Import Quota #20 will be established Sept. 5 for 43,369 bales of upland cotton, applying to supplies purchased not later than Dec. 3 and entered into the U.S. not later than March 3.

KEY LINKS