News/Markets/Policy Updates: Nov. 4, 2024
— David Wasserman on presidential contest. “As you know, a week ago I considered Trump a 60%-40% favorite. But Trump has had a terrible past week between “floating garbage,” “taking care of women whether they like it or not,” water fluoridation, etc. Might still give him a tiny edge but outlook has tightened considerably the more off-message he’s been.” (Trump said yesterday that if elected, he would consider taking action against vaccines and fluoride in the country’s water supply, two public health issues championed by Robert F. Kennedy Jr.) Wasserman is election analyst for the Cook Political Report with Amy Walter. Of note: The race tightened over the weekend as the Des Moines Register’s final presidential poll shockingly had Harris up three points in the state, underscoring that the election will be closer than current market expectations. The Iowa/Selzer poll has roiled the political betting markets. Following its publication, Trump’s odds of victory fell on platforms including Polymarket, after they had climbed in recent weeks, in tandem with crypto and other elements of the Trump trade. Trump’s odds on Polymarket were at nearly 58% this morning, down from 67% on Wednesday. (Polls measure how voters intend to cast their ballots, while prediction markets track the odds of a candidate’s victory implied by bets on a platform.) — Nate Silver: 2024 presidential race a ‘pure toss-up.’ Election analyst Nate Silver described the 2024 presidential race as a “pure toss-up,” giving former President Donald Trump a slight advantage over Vice President Kamala Harris. Silver’s latest forecast indicates Trump has a 51.5% chance of winning the Electoral College, compared to Harris’ 48.1%, as reported on Substack. He noted that while New York Times swing state polls favor Harris and Morning Consult polls lean toward Trump, neither has a decisive lead. — Tom Essaye from the Sevens Report notes some key points about the 2024 presidential election: — Overseas Americans seen as key factor in tight 2024 presidential race. Americans living abroad — numbering at least 4.4 million with 2.8 million eligible to vote — are becoming a focus for both parties in the tight presidential race between Kamala Harris and Donald Trump, Time reports (link). Historically low overseas voter turnout, only 7.8% in 2020, prompts efforts by Democrats Abroad and Republicans Overseas to mobilize voters, emphasizing digital outreach and local campaigns. Key issues include foreign policy and “double taxation,” a rare bipartisan concern. Trump pledged to end overseas tax filing requirements, highlighting the expat vote’s potential. However, GOP lawsuits challenging overseas ballots in swing states were rejected by courts, with critics calling such actions voter suppression. — In the final days leading up to the presidential election, Donald Trump and Kamala Harris were actively campaigning across key swing states. Trump, in Pennsylvania, used fiery rhetoric, joking about extreme measures against media and making baseless claims that Democrats were attempting to steal the election. He also expressed lingering resentment over his 2020 loss, suggesting he “shouldn’t have left” office. Kamala Harris adopted a hopeful and unifying tone during her campaign stop in Michigan. She aimed to appeal to voters by promising a break from fear-driven politics and pledged to work toward ending the conflict in Gaza. Her focus on Michigan reflects its strategic importance in securing a pathway to victory through the rust belt states, which are crucial for Democratic success. Today’s agenda: Harris will spend her final day of campaigning in Pennsylvania, with rallies in Allentown, Pittsburgh and Philadelphia. Trump will be in three battleground states, holding events in North Carolina, Pennsylvania and Michigan. — NBC aired a short video message from Donald Trump after coming under fire for allowing Harris to appear on Saturday Night Live, a sketch-comedy show, on Saturday. On the program, Harris told her mirror-image to “keep calm-ala and carry on-ala” and poked fun at her opponent. A member of the Federal Communications Commission suggested that the appearance violated the “equal time” rules that govern political programming. — D.C. gears up with heightened security measures ahead of presidential election. Washington, D.C., is ramping up security as authorities and businesses brace for potential unrest following Tuesday’s presidential election, the Washington Post reports (link). New security fencing has been set up around the White House, Capitol, and Vice President Kamala Harris’s residence. The city, still marked by 2020’s protests and the Jan. 6 Capitol attack, has prepared for possible disruption by deploying all 3,300 police officers on 12-hour shifts. Business owners have reinforced properties with private security and boarded windows as a precaution, despite officials saying there is no credible threat. The Secret Service emphasized that the measures are part of broad public safety preparations. — The dollar index falls the most in more than a month as polling data signaled the Democratic candidate Kamala Harris might be edging ahead in some swing states. Bonds and stock futures rose. Cash trade in U.S. Treasuries trade was closed in Asian trading hours as markets in Japan were closed for a public holiday. In stocks, traders are betting on volatility with the closely watched “fear index” signaling rising market stress. — U.S. interest rate cuts are returning, with the Fed expected to announce a 25-basis-point cut on Thursday. Traders are anticipating this move, and there remains one more opportunity for a cut in December. However, JPMorgan’s strategy chief noted that a potential Trump election win could make the Fed reconsider further rate reductions. — Harris vs. Trump: How their policies would affect U.S. consumers. The policies of Vice President Kamala Harris and former President Donald Trump present stark differences with significant implications for U.S. consumers: — Control of the Senate is at stake in Tuesday’s election, with Republicans favored to win the majority, but Democrats still have a chance. Despite challenges, including the retirement of West Virginia Sen. Joe Manchin making the map tougher for them, Democrats’ well-funded candidates have often outperformed expectations in key races. Additionally, potential Democratic gains have emerged in states like Texas and Nebraska, providing opportunities to counterbalance Republican advances. The Cook Political Report sees the GOP gaining control of the Senate with 51-54 seats. Most see control of the House, like the White House, a jump ball. — China’s legislature begins crucial session on economic stimulus amid investor concerns over potential Trump tariffs. The Standing Committee of China’s legislature has begun an important five-day session in Beijing, where economic stimulus measures are set to be discussed. The measures approved during this meeting are expected to signal the leadership’s approach to handling the country’s economic challenges. Key elements of the anticipated package include potential bank recapitalization, refinancing of local government debt, and possible support for households. This package will be closely watched by investors looking for signs that Chinese policymakers understand the gravity of the economic situation and are prepared to allocate sufficient resources to address it. Another significant concern for investors is how China will respond if Donald Trump wins the U.S. presidential election. Trump has threatened severe tariffs of 60% on Chinese imports, which, according to UBS, could reduce China’s GDP growth by 2.5 percentage points over the following year. If such tariffs are implemented, China might need to adopt a more aggressive economic stimulus to counteract the impact. — The Southern Plains are bracing for more severe weather today as Oklahoma residents assess the damage from recent storms that produced tornadoes, injuring at least 11 people and destroying homes over the weekend. The Storm Prediction Center has warned that scattered severe thunderstorms, potentially involving strong tornadoes, large hail, and damaging winds, are likely from the Southern Plains to the Ozarks and mid-Mississippi Valley. Areas from central and eastern Texas to western Illinois, including major cities like Dallas, Houston, Austin, and St. Louis, are also at risk for damaging winds, hail, and tornadoes. |
| MARKET FOCUS |
— Equities today: Asian and European stock indexes were mixed overnight. In Asia, Japan closed. Hong Kong +0.3%. China +1.2%. India -1.2%. In Europe, at midday, London +0.7%. Paris +0.3%. Frankfurt flat. U.S. Dow is currently down around 95 points. Today there are no notable economic reports, nor any Fed speakers so last-minute election outlook changes will be the driver of markets, although with the race so close it’s likely markets mostly chop sideways ahead of the election results, analysts note.
U.S. equities Friday and for the week: All three major indices managed to finish with gains on Friday but lost ground for the week. The Dow was 0.15% lower, the Nasdaq fell 1.5% and the S&P 500 declined 1.37%. On Friday, the Dow closed up 288.73 points, 0.69%, at 42,052.19. The Nasdaq rose 144.77 points, 0.80%, at 18,239.92. The S&P 500 gained 23.35 points, 0.41%, at 5,728.80.
— More than two-thirds of S&P 500 companies have already reported earnings for this quarter, but there are still nearly 100 coming up this week.
• Monday: Palantir Technologies (after the bell)
• Tuesday: Yum Brands, Restaurants Brands International (before the bell)
• Wednesday: CVS (before the bell); Qualcomm, Arm Holdings, e.l.f., Virgin Galactic, AMC (after the bell)
• Thursday: Under Armour, Tapestry, Moderna, Warner Brothers Discovery (before the bell); Airbnb, Block, Lucid, Capri Holdings, Rivian, Draftkings (after the bell)
• Friday: Paramount (before the bell)
— Nvidia will replace Intel in the Dow average this week. Sherwin-Williams will also replace Dow Inc.
— Boeing’s striking workers will vote today on a new contract proposal. Employees rejected two earlier proposals to end a labor stoppage that began on Sept. 13, but the union has urged its members to back the revised deal, which has slightly improved terms.
Separately, the plane maker plans to say it had broken up its diversity, equity and inclusion (DEI) initiatives department.
— TGI Fridays Inc., the American casual dining chain, filed for Chapter 11 bankruptcy protection Saturday. The company said in a statement that fallout from the Covid-19 pandemic was the “primary driver of our financial challenges” and it will use the Chapter 11 process to “explore strategic alternatives in order to ensure the long-term viability of the brand.”
— Berkshire Hathaway’s cash pile reached a record $325 billion as Warren Buffett continued to sell some of his biggest stakes including Apple shares, this time by about 25%, or $70 billion. Buffett suggested at Berkshire’s annual meeting in May that selling Apple shares was driven in part because of tax reasons. But Berkshire has sold $166 billion worth of stocks over the past two years.
— Oil prices rose slightly on Friday amid reports that Iran was planning a retaliatory strike on Israel from Iraq, though record U.S. oil production limited gains. Brent crude increased by 29 cents, 0.4%, to settle at $73.10 a barrel, while WTI crude rose 23 cents, 0.3%, to $69.49. Despite early-session gains of over $2, both benchmarks ended the week lower, with Brent down 4% and WTI down 3%.
Today, oil prices rose by more than $1 a barrel in early trading (3% higher) after OPEC+ said that it would delay an increase in oil output, planned for December, by a month (details below). The club of oil-producing countries had been planning to increase supply, but weak demand, especially from China, and competition from other oil producers has kept prices low.
— Ag markets today: Soybeans posted double-digit gains overnight while corn followed to the upside. Wheat is narrowly mixed this morning after gains earlier during overnight trade. As of 7:30 a.m. ET, corn futures were trading 2 to 3 cents higher, soybeans were 12 to 13 cents higher and wheat futures were a penny lower to 1 cent higher. The U.S. dollar index was more than 600 points lower, and front-month crude oil futures were around $2.00 higher this morning.
Cattle market looking toppy. After reaching the highest level since early July last Tuesday, December live cattle futures dropped sharply amid corrective selling. But the contract finished well off session lows Friday, marking key support bulls must defend to avoid a deeper pullback. The cash cattle and boxed beef markets also showed signs of topping last week.
Cash hog fundamentals continue to strengthen. The CME lean hog index is up another 63 cents to $88.56 as of Oct. 31, rising for an 11th consecutive day and reaching the highest level since Aug. 21. The pork cutout firmed 82 cents to $103.97 on Friday, as strong gains in primal bellies and hams offset weakness in other cut, rising to the highest level since Aug. 5.
— Agriculture markets Friday and for the week:
• Corn: December corn futures climbed 3 3/4 cents to $4.14 1/2 but marked a 3/4 cent loss on the week.
• Soy complex: January soybeans fell 3/4 cent to $9.93 3/4 and gave up 2 1/4 cents on the week. December soymeal closed $4.20 lower at $295.30, marking a $10.50 weekly loss, while December soyoil rallied 116 points to 46.30 cents, securing a 215-point weekly gain.
• Wheat: December SRW futures sunk 2 1/2 cents to $5.68, losing a penny on the week. December HRW futures dropped 2 1/2 cents to $5.66 3/4, down 5 1/4 cents on the week. December HRS futures fell 4 1/2 cents to $5.99 3/4 and for the week fell 5 1/2 cents.
• Cotton: December cotton rose 60 points to 70.17 cents but gave up 49 points on the week.
• Cattle: December live cattle futures continued this week’s slide, losing 37.5 cents to $185.925 on the day and $3.225 on the week. Conversely, November feeder futures rebounded $1.50 to $246.875 at settlement. That close marked a weekly drop of $1.70.
• Hogs: Futures continued their recent surge, with the nearby December contract posting a fresh contract high before setting back. It ended Friday at $84.075, up 27.5 cents on the day and $4.40 on the week.
— Dr. Vince Malanga on U.S. economy: Strong GDP growth amid inflation; Fed rate cuts expected but fiscal concerns loom. Dr. Vince Malanga, president of LaSalle Economics, says real GDP grew at a 2.8% rate in the summer, with inflation at 1.8%, signaling strong corporate profits if sustained. Federal spending and consumption were key drivers, he notes, while trade and construction underperformed. Although business investment was stable, external events like hurricanes and strikes impacted the quarter.
The Federal Reserve is expected to cut rates, though Malanga signals future economic stability may be threatened by conflicting survey data, recent steepening of the yield curve, and a federal deficit near 7% of GDP. Long-term rates may be rising due to investor concerns over fiscal sustainability, potentially signaling discontent with growing federal red ink. Housing markets showed signs of a recovery but were negatively impacted by rising rates.
Malanga says both presidential candidates have not focused on addressing the deficit, favoring tax cuts and subsidies instead. The Federal Reserve, which has traditionally stayed clear of fiscal policies, might need to step in, he believes, with Chair Powell likely considering whether to counter deficits or monetize debt.
Malanga’s bottom line: The sustainability of the current growth and low inflation relies on fiscal responsibility and economic adjustments moving forward.
— Soaring costs push many Americans out of new-car market. Rising prices are driving Americans, including those with higher incomes, away from the new-car market. The average price for a new vehicle has surged to $48,205, a 21% increase over five years, with average monthly payments now at $767, up 17% from four years ago, per Cox Automotive.
Meanwhile, Edmunds.com reports that one in six new-car buyers will face payments exceeding $1,000 monthly, while 73% of consumers are delaying purchases due to costs. This trend is fueled by higher sticker prices due to advanced technology, automakers’ focus on profit, and escalating auto loan rates.
Market perspectives:
— Outside markets: The U.S. dollar index was weaker, with the euro and British pound both firmer against the greenback. The yield on the 10-year U.S. Treasury note was under pressure, trading around 4.28%, with a mostly negative tone in global government bond yields. Crude oil futures were moving higher, with US crude around $71.60 per barrel and Brent around $75.20 per barrel. Gold and silver futures were firmer, with gold around $2,750 per troy ounce and silver around $32.93 per troy ounce.
— OPEC+ again pushes back production increase. OPEC+ agreed to push back its December production increase by one month, the second delay to its plans to revive supply as prices continue to struggle amid a fragile economic outlook. The group led by Saudi Arabia and Russia had intended to begin a series of monthly production increases by adding 180,000 barrels a day from December, but they will now keep supply restrained through year-end.
— Brazil’s finance minister, Fernando Haddad, canceled his planned trip to Europe this week at President Lula’s request, due to mounting losses of the real and uncertainty over the government’s spending cut plans. Haddad will stay in Brasília to focus on domestic matters, with the trip to be rescheduled later. The real was the worst-performing emerging-market currency on Friday, dropping as much as 1.5% against the dollar, amid fears of fiscal slippage and delayed spending cut announcements. Concerns also include Lula’s commitment to fiscal discipline and the potential impacts of the U.S. presidential election.
— Canada’s major ports face shutdown amid longshore union lockout. Canada’s two largest ports, Vancouver and Port Rupert, face imminent closure as maritime employers respond to a strike notice from the International Longshore and Warehouse Union Ship & Dock Foremen Local 514 by locking out workers. The potential shutdown threatens C$800 million (around $575 million) in daily trade, prompting calls for government intervention. The union, representing 730 workers, issued a 72-hour strike notice for Monday, but the BC Maritime Employers Association plans a lockout unless a truce is reached. Talks for a new labor contract, stalled since March 2023, have failed multiple times despite federal mediation efforts. The disruptions add pressure to Canada’s logistics network, with the Port of Montreal also facing partial shutdowns due to separate disputes.
— BNSF Railway’s operating profit jumped 13.4% in the third quarter as revenue rose 2% to $5.9 billion. Meanwhile, Union Pacific and CSX are opting out of national labor talks with railroad unions to focus on their own local negotiations.
— USDA daily export sales:
• 150,000 MT corn to Mexico, 2024-2025 marketing year.
• 120,000 MT corn to unknown destinations, 2024-202- marketing year.
• 132,000 MT soybeans to unknown destinations, 2024/2025 marketing year.
— Ag trade update: South Korea purchased 66,000 MT of corn to be sourced from South America or South Africa. Egypt tendered for an unspecified amount of wheat from multiple sources. Indonesia purchased
— NWS outlook: More heavy rain and severe weather focusing across eastern Oklahoma to the Midwest today will weaken and gradually shift east toward the Mid-Mississippi Valley on Tuesday... ...Next round of mountain snow and wind will quickly overspread into the Pacific Northwest today, across the northern Rockies on Tuesday, and then into the central Rockies by Tuesday night... ...Watching South Florida and especially the Florida Keys for impacts associated with Potential Tropical Cyclone Eighteen which is forecast to reach hurricane strength by Wednesday morning... ...Above average temperatures approaching record levels will build across the Mississippi Valley, Great Lakes, and East Coast.
Items in Pro Farmer’s First Thing Today include:
• Corn and soybeans firmer, wheat mixed to open the week
• South America in line for more rains
• Brazil’s soybean planting surges again
• Eurozone PMI rises slightly more than flash estimate
| ISRAEL/HAMAS CONFLICT |
— Iran plans post-election counterattack on Israel as tensions escalate. Iran is reportedly preparing a counterattack on Israel involving advanced warheads and weapons, with plans to execute it after the U.S. election but before January’s inauguration, according to the Wall Street Journal (link). Iran’s Supreme Leader heightened the rhetoric, promising a “crushing response” to adversaries. Meanwhile, Israeli Prime Minister Benjamin Netanyahu’s office faces accusations of leaking classified information to undermine efforts for a Gaza cease-fire.
| RUSSIA/UKRAINE |
— Ukraine’s grain exports hit 14.7 MMT for 2024-25, surpassing last year’s pace, according to Agriculture Ministry data. This includes 7.9 MMT of wheat, 4.8 MMT of corn, and 1.7 MMT of barley, surpassing the 9.8 MMT recorded by this time last year for 2023-24. A Reuters report highlighted that nearly 49% of the agreed 16.2 MMT wheat export quota for 2024-25 has already been utilized.
— Unfavorable start for Ukraine’s winter grain crops. Weather over the past two months was unfavorable for development of Ukraine’s winter grain crops, analyst APK-Inform quoted the Ukrainian national agricultural academy as saying. “Expectations of favorable weather in the second half of the autumn period and hopes for rainy weather were largely not justified,” the scientists said in a report. “The development of plants is very slow, which threatens their further fate during the winter period.” They noted in the key steppe zone for cereal grains, drought lasted from June to October, or 117 days, the longest in three decades.
| CHINA UPDATE |
— China to file lawsuit with WTO against EU’s EV tariffs. China’s commerce ministry said it has decided to file a lawsuit with the World Trade Organization (WTO) against the EU’s final countervailing measures on China-made electric vehicles (EVs). EU tariffs on China-made EVs went into effect last week, but the two sides will continue to meet on the issue with the bloc planning to send representatives to China for negotiations regarding price commitments in the EV tariff dispute. China has urged France to push the European Commission toward a solution acceptable to both the European and Chinese EV industries.
Chinese officials urged France to take an “active role” in influencing the EU on EV tariffs, with Commerce Minister Wang Wentao seeking an agreeable resolution. However, French junior trade minister Sophie Primas stated during her visit to Shanghai that France would not relent, particularly given China’s trade investigations into EU products such as French brandy. Primas’ office affirmed that France and the EU would stand firm to protect fair competition. Wang defended China’s investigations into EU goods as compliant with WTO rules and criticized EU tariffs on Chinese EVs as “rash.”
| TRADE POLICY |
— USMEF conference focuses on trade relationships and market expansion. The U.S. Meat Export Federation (USMEF) is holding its annual Strategic Planning Conference in Tucson, Arizona, this week. USMEF Chair Randy Spronk, who is concluding his leadership term, highlighted the organization’s progress in expanding its marketing footprint with USDA’s new Regional Agricultural Promotion Program (RAPP), aiding outreach to developing markets like Indonesia. Key sessions include a panel on the value of direct interaction between farmers, industry leaders, and trading partners, featuring representatives from major cattle and pork boards. Another session will delve into U.S./Mexico trade relations as Mexico transitions to a new administration.
| ENERGY & CLIMATE CHANGE |
— Eni sells Alaska assets to Hilcorp. The Italian energy firm Eni said it will gain $1 billion via the sale of its Nikaitchuq and Oooguruk upstream offshore assets in Alaska to US private company Hilcorp. Eni aims to raise 8 billion euros in net proceeds over 2024-2027 by selling upstream assets, reducing ownership in its main exploration discoveries and tapping new investors to fund the growth of its low-carbon units.
| HEALTH UPDATE |
— Viking Therapeutics’ experimental obesity pill showed promise in a study. Novo Nordisk is also working on next-generation drugs, with one compound predicted to help patients lose at least 25% of body weight.
| OTHER ITEMS OF NOTE |
— M136279841: That’s the official name of the world’s largest known prime number recently discovered by Luke Durant, a 36-year-old former programmer for Nvidia. Durant’s remarkable finding consists of an astounding 41,024,320 digits and marks the first prime breakthrough in almost six years.
— Survey reveals high adoption of seed treatments among U.S. soybean farmers. A recent survey (link) by the American Soybean Association (ASA) and the United Soybean Board found widespread use of seed treatments among U.S. soybean farmers. Seed treatments, which include pesticides applied to seeds before planting to protect against early pest damage, are seen as crucial for maintaining plant health and yields. The survey indicated 90% of soybean acres were planted with treated seeds, and only 3% of respondents had never used them. Without seed treatments, farmers would face higher costs and reduced yields, resorting to less preferred alternatives like increased seeding rates and more pesticide applications. Most farmers rely on seed dealers or companies for treated seeds, and over a third store them in enclosed buildings until planting.
| 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 | | Russia/Ukraine war, lessons learned | | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum |