Huge Economic Costs for Ian, Including Ravaging Florida’s Orange Crop

‘Where’s Jackie?’ is not what the White House wanted as key takeaway from Wednesday White House confab

Soybeans major export sales activity for China in most recent week. USDA Export Sales figures for the week ended Sept. 22 showed sales of U.S. soybeans as the major activity. Activity for 2022-23 was reported as net sales of 4,836 tonnes of wheat, 5,181 tonnes of corn, and 548,658 tonnes of soybeans. There was no sales activity reported for grain sorghum or upland cotton. For 2022, net sales of 6,040 tonnes of beef and 2,022 tonnes of pork were reported. ‘

Ian’s effects are expected to be widespread, with tropical-storm force winds extending out 175 miles and as much as two feet of rain forecast. The National Hurricane Center said the storm’s speed made it likely it would remain more intact as it crosses the state, increasing the threat of hurricane-force winds on Florida’s eastern coast. The state’s largest cargo seaport at Jacksonville on the Atlantic shut down ahead of the storm while Miami and Port Everglades were sending bigger ships out to sea and halting landside operations.

The Biden administration approved a temporary waiver of Jones Act shipping restrictions to allow a tanker to deliver diesel fuel to Puerto Rico in its recovery from Hurricane Fiona.

The Senate is expected to approve a stopgap funding bill today, allowing government operations to run through Dec. 16, including billions of dollars for Ukraine. The House returns today and must pass it by the end of Friday. Final passage of the stopgap spending bill today will require agreement from all 100 senators to speed up the usual 30 hours of post-cloture time. Sen. Richard Shelby (R-Ala.), the top Republican appropriator in the Senate, said he expects some GOP support for a time agreement to be contingent on votes on GOP members’ amendments.

The U.S. dollar continues to surge against other currencies, including the euro and British pound, as investors seek a safe haven as global recession fears intensify.

Britain’s prime minister Liz Truss said she would not roll back her government’s “mini-budget” that has roiled markets and was prepared to take “controversial” steps to boost growth.

The Swedish Coast Guard discovers a fourth leak in the Nord Stream gas pipelines. The reported rupture, in the country’s waters, raised further questions about the extent of what European officials have called sabotage. NATO also said this morning that “acts of sabotage” were to blame for the leaks.

Russian President Vladimir Putin plans to sign a decree to annex four Russian-controlled regions of eastern Ukraine on Friday.

You can tell China is in more economic trouble than they are letting on with several actions taken today, as details in the China section. Beijing warned investors against betting on the renminbi. The People’s Bank of China posted a notice on its website urging traders not to wager on the Chinese currency’s rises and falls. The central bank has also directed state-run banks to buy the currency (and sell the dollar) to prop up the slumping renminbi.

Wednesday’s White House confab on alleviating food hunger brought deliverables that certainly were not intended. More in Food section.

Cotton’s price plunge has values closer to their typical levels, with the most actively traded futures ending Tuesday at 88 cents a pound, down more than 40% from their peak in May, which was the highest price in more than a decade. More in Markets section.

Highlight of the White House conference to end hunger wasn’t what President Biden had in mind. “Where’s Jackie?” is the key takeaway from Wednesday’s event, which urged billions and billions more spending on food and nutrition programs.

A business group lawsuit claims the Consumer Financial Protection Bureau is overstepping its authority, and is among the first to argue against a federal regulator by pointing to a recent Supreme Court ruling, West Virginia v. EPA.

Several updated polls assess the latest predictions for Nov. 8 elections, with details in the Politics & Elections section.

Election Day 2022 is 40 days away. Election Day 2024 is 768 days away.

Equities today: Global stock markets were mixed but mostly lower overnight. U.S. Dow opened around 200 points lower and then plunged by around 500 points as bond yields increase. In Asia, Japan +1%. Hong Kong -0.5%. China -0.1%. India -0.3%. In Europe, at midday, London -0.9%. Paris -1.3%. Frankfurt -1.3%.

U.S. equities yesterday: The Dow ended up 548.75 points, 1.88%, at 29,683.74. The Nasdaq gained 222.13 points, 2.05%, at 11,051.64. The S&P 500 was up 71.75 points, 1.97%, at 3,719.04.

So far, the tech-heavy Nasdaq has fallen about 6.5% in September, while the Dow is down about 5.8% and the S&P 500 has declined about 5.9%.

Agriculture markets yesterday:

• Corn: December corn rose 3 cents to $6.70 1/2, after dropping earlier to a three-week low at $6.61 1/2.
• Soy complex: November soybeans rose 3/4 cent to $14.08 3/4, after earlier dropping to a three-week low at $13.90 3/4. December soymeal fell 90 cents to $412.70. December soyoil fell 24 points to 62.15 cents.
• Wheat: December SRW wheat rose 31 3/4 cents to $9.03 1/4. December HRW wheat gained 32 3/4 cents to $9.76. December spring wheat futures rose 29 1/4 cents to $9.72 1/2.
• Cotton: December cotton futures rose 40 points at 88.49 cents, after hitting a nine-week low earlier.
• Cattle: December live cattle fell 62.5 cents to $146.275, the contract’s lowest closing price since July 18. November feeder futures sank $1.125 to $175.00. USDA reported sizeable numbers of steers changing hands Tuesday at $143.38, down from last week’s $144.94 live steer average.
• Hogs: December lean hog futures fell 42.5 cents to $75.825, the contract’s lowest closing price since December 20. The CME lean hog index is down 58 cents to $96.41, its fifth drop in the last six days.
  

Ag markets today: Overnight trade was light and two-sided, though buyer interest is building with grain and soy markets trading near session highs early this morning. As of 7:30 a.m. ET, corn futures were trading 3 to 4 cents higher, soybeans were 11 to 14 cents higher and wheat futures were 6 to 10 cents higher. Front-month crude oil futures were modestly firmer, while the U.S. dollar index was around 350 points higher.

Technical viewpoints from Jim Wyckoff:

On tap today:

• U.S. jobless claims are expected to rise to 215,000 in the week ended Sept. 24 from 213,000 one week earlier. (8:30 a.m. ET)
• U.S. gross domestic product for the second quarter is expected to contract at a 0.6% annual pace, unchanged from an earlier estimate. (8:30 a.m. ET)
• USDA’s Weekly Export Sales report, 8:30 a.m. ET.
• Federal Reserve speakers: St. Louis’s James Bullard at a forum on emerging markets at 9:30 a.m. ET, Cleveland’s Loretta Mester on a panel on inflation at 1 p.m. ET, and San Francisco’s Mary Daly at Boise State University at 3:45 p.m. ET.
• China’s official purchasing managers indexes for manufacturing and services in September are out at 9:30 p.m. ET.
• China’s Caixin manufacturing index for September is out at 9:45 p.m. ET.
• President Joe Biden at noon ET receives a briefing on the response to Hurricane Ian. Biden hosts a summit of leaders from Pacific island nations at 3 p.m. ET.

The U.S. merchandise-trade deficit narrowed in August to the smallest since October 2021 as both imports and exports dropped, suggesting a tailwind for economic growth in the third quarter. The shortfall shrank 3.2% to $87.3 billion last month, Commerce Department data showed Wednesday. Exports declined 0.9% to $179.8 billion, the first drop since January. Imports retreated for the fifth straight month to $267.1 billion. Inbound shipments of consumer goods advanced 4.5% to $283.2 billion. While imports of consumer merchandise have fallen from a record earlier this year, they remain well higher than the pre-pandemic average. The dollar strengthened for a third straight month in August, lowering the cost of imports and making exports more expensive. The U.S. currency has since gained even more as the Federal Reserve presses on with significant interest-rate hikes, signaling further difficulty to exporters ahead.

Eurozone economic sentiment plunges. Eurozone economic sentiment fell more sharply than expected in September, as confidence dropped among companies and consumers, who are also downbeat about price trends in the coming months. The European Commission’s monthly economic sentiment index fell to 93.7 points in September from a downwardly revised 97.3 in August. Confidence fell in all economic sectors amid a rise in inflation expectations across the board, with the decline most pronounced among manufacturers and consumers.

An eye-catching 87% of manufacturing CEOs say they’ll continue to hike prices in 2023 as rising inflation persists, according to a recent Forbes poll conducted alongside Xometry and Zogby. That comes even as many companies reported having lost customers from already increasing their prices to offset production costs. Plus, two-thirds of the surveyed executives offered a gloomy economic outlook by predicting a recession is “definitely” or “very likely” coming in the next year.

Saudi Arabia’s huge sovereign wealth fund opens its books. The $608 billion Public Investment Fund reported a 25% return for its shareholders last year, as part of its plans to issue its first-ever bonds. The unusual move is meant to help the fund raise money for ambitious infrastructure projects down the line.

World Bank leader warns of challenges ahead. Head of the World Bank warned that developing nations face an extremely challenging near-term outlook, as the sharp slowdown in global growth raises the risks of a prolonged recession. Speaking Wednesday at Stanford University, David Malpass said the challenges for the developing world are shaped by higher food, fertilizer and energy prices caused by the war in Ukraine, as well as rising interest rates, currency depreciation and capital outflows, which could result in a shortage of funds needed to support people’s lives and economic activities.

Market perspectives:

• Outside markets: Gov’t bond yields and the U.S. dollar are on the rise again as the marketplace is spooked by rising inflation, the specter of global economic recession, and currency and financial markets instability. The dollar climbed versus all its Group-of-10 peers. The yield on the 10-year U.S. Treasury note is rising and presently fetching 3.836% after rising above 4.0% overnight. The 2-year Treasury note yield is 4.4%. Crude has is slightly higher ahead of US trading, with US crude around $82.30 per barrel and Brent around $88.20 per barrel. Gold and silver futures are posting losses, with gold under $1,658 per troy ounce and silver under $18.63 per troy ounce.

• Major U.S. railroads reached a new tentative contract agreement with the machinists’ union that rejected an earlier pact. The National Carriers Conference Committee (NCCC), representing most Class I railroads and many smaller ones, has reached a second tentative agreement with the International Association of Machinists and Aerospace Workers (Machinists). The effort tweaked a tentative agreement rejected by that union’s members in a ratification vote earlier this month. The tweaked version will be resubmitted to the membership for a second ratification vote. The cooling off period will now put IAM District 19 members back on schedule with many other rail unions. The new cooling off period will expire on Dec. 9, 2022. All 12 rail unions and the NCCC have reached tentative agreements, but each is subject to a member ratification vote. District 19 Machinists, so far, are the only one of the 12 to reject tentative agreements reached with the carriers. Members of two other rail labor organizations — the Transportation Communications Union (TCU) and Brotherhood Railway Carmen (BRC), both also affiliated with the Machinists — voted to ratify, while nine other rail unions either have ratification votes pending or are preparing to poll members. Collectively, the 12 unions represent some 125,000 workers affected by these contract talks.

• Another ag sector worry: Low water levels on the Mississippi River. Analyst and trader Richard Crow says: “The draft loading is limited to 8 ft. The higher barge freight is forcing the interior basis at River points down. The limited ability to load at river points brings a discussion of delivery questions. The relation of cash values to freight will become a significant variable. The overnight market saw beans spread, moving out 2 cents and corn spreads a ½ cent.”

• Cotton markets are unraveling under pressures from waning consumer sales. Cotton futures prices have shed 25% since late last month, the Wall Street Journal reports (link), effectively eliminating gains following a forecast that drought would severely limit harvests and supplies. Cotton prices had been trending higher during the pandemic, but the agriculture product more recently has become the latest commodity to show signs of upheaval as the effects of pandemic-driven consumer trends fade. The supply concerns have been no match for crumbling demand. Clothing sales have been sliding amid broader shifts in consumer markets, and manufacturers are forecasting falling sales as consumers turn to food and fuel and their appetite for apparel diminishes. British online retailer ASOS recently warned that profits would be at the low end of its full-year forecasts. Fast-fashion brand Primark warned of lower profits ahead, citing high energy costs and a strong U.S. dollar.

• Ag trade: Taiwan purchased 51,800 MT of U.S. milling wheat. Japan purchased 61,800 MT of milling wheat in its weekly tender, including 28,550 MT U.S. and 33,250 MT Canadian. South Korea tendered to buy up to 69,000 MT of optional origin corn. Iraq tendered to buy a nominal 50,000 MT of milling wheat from unspecified origins.

• Ian’s impact on the U.S. energy sector relatively limited. As of midday Wednesday (Sept. 28), the Bureau of Safety and Environmental Enforcement (BSEE) said that 9.12% of oil and 5.95% of natural gas production in the Gulf of Mexico was shut in because of the storm. The agency’s update indicated it was the final update, underscoring the apparent limited impact the storm has had on energy operations in the Gulf. The Wednesday update indicated 11 platforms were evacuated, (2.11% of those in the Gulf), 5 rigs were evacuated (35.71% in the Gulf) and three dynamically positioned rigs (15.79% of the DP rigs) were moved off location. Crude production is expected to return online in the next several days.

• Ian is impacting orange prices, markets. This year’s already high orange juice prices were soaring as Hurricane Ian struck the heart of Florida’s citrus-growing region. Frozen concentrate orange-juice futures trading on ICE are up 33% this year, and hit as high as $1.92 a pound on Wednesday. “Whenever you get a weather event like a hurricane or a freeze, the market moves up on the event, in a ‘buy the rumor, sell the news’ kind of action,” but it might take weeks for growers to assess the damage, Shawn Hackett, president of Hackett Financial Advisors in Boca Raton, Fla., told Barron’s. Orange production is down 22.7% in Florida this year, according to USDA, hurt by the spread of an incurable plant disease. Florida grows most of the oranges used for juice in the U.S. Hurricanes attract speculators to the normally small orange futures market. Orange-juice futures rose nearly 14% before Hurricane Irma hit the citrus growing region in September 2017 and fell 11.6% in the two weeks following. The first USDA estimate of orange production for the 2022-2023 growing season comes out Oct. 12.

• NWS weather: Hurricane Ian weakens into a tropical storm after landfall but continues to bring damaging winds, prolific rainfall amounts and life-threatening flash flooding across the north-central portion of Florida Peninsula... ...Ian is forecast to make another landfall across the southeastern U.S. on Friday with strong winds and storm surge near the coast, and widespread heavy rain spreading well inland across the Southeast U.S... ...Cool high-pressure system will dominate the eastern half of the country outside of Ian as heat in the West will give way to rain and cooler temperatures moving into the Pacific Northwest and the northern Rockies.

Items in Pro Farmer’s First Thing Today include:

• Firmer tone in grain, soy markets this morning
• China’s state banks told to prepare for yuan intervention (details in China section)
• H&P Report to show more herd contraction
• Steady cash cattle trade in Southern Plains
• Pork cutout back above $100

— Summary: President Vladimir Putin will sign agreements on Friday to absorb four Ukrainian territories, the Kremlin said, adding that Putin would make a speech on Friday.

• U.S. officials say Russia is the leading suspect in the Nord Stream pipeline leaks investigation. A fourth leak was found today in the pipelines connecting Russia to Germany and there was a “very strong indication” these were acts of sabotage, a German official said. EU leaders are to meet next week and discuss the Nord Stream pipeline leaks, an EU official said, noting that situation means that “the strategic infrastructure in the entire EU has to be protected.” The officials said the situation “changes fundamentally” the nature of the conflict. “The presumed sabotage of the Baltic Sea pipelines shows us once again that we are dependent on critical infrastructure, including underwater,” said German Defense Minister Christine Lambrecht.

• The EU’s executive plans to advance efforts to allow an international price cap on seaborne Russian crude, the Wall Street Journal reports (link), and is proposing new limitations on the import of Russian goods. The price cap on oil is aimed at softening the potential global market effects of an EU oil embargo on Russia, and would ban insurance of vessels carrying Russian oil. Because that insurance market is dominated by European firms, it could have impeded a much larger share of Russia’s market. Brussels plans to permit European companies to insure shipments to third countries if the oil is sold within the price cap. The commission is also proposing banning EU ship operators from carrying Russian oil priced above the price cap.

  German businesses are growing concerned that without an energy price cap, a wave of insolvencies could wash over the country in coming weeks and disrupt the supply chains serving Germany’s largest industrial sectors. Starved of the abundant Russian energy that long fired the nation’s industrial engine, German businesses have already been curtailing production and halting investments.

— Yellen tells White House she’ll stay past November midterms. Janet Yellen, eager to see through crucial projects, has told White House officials she’s prepared to remain Treasury secretary well after the midterm elections, according to reports citing people familiar with the discussions.

— China’s state banks told to prepare for yuan intervention. The People’s Bank of China (PBOC) has asked major state-owned banks to be prepared to sell dollars for the local unit in offshore markets as it steps up efforts to stem the yuan’s descent, Reuters reported, citing four sources with knowledge of the matter. State banks were told to ask their offshore branches, including those based in Hong Kong, New York and London, to review their holdings of the offshore yuan and ensure U.S. dollar reserves are ready to be deployed, three of the sources told Reuters. The simultaneous selling of dollars and buying of yuan could put a floor under the Chinese currency, which has lost more than 11% to the dollar so far this year and looks set for its biggest annual decline since 1994, when China unified its official and market rates. Sources said the intervention plan involved using state lenders’ dollar reserves primarily. But the total amount of dollar selling is yet to be determined as the yuan’s movements are largely dependent on dollar moves and the Fed’s tightening trajectory, the sources said.

— China’s central bank to step up economic support. PBOC said it will step up efforts to consolidate an economic recovery, citing an array of risks to the global economy while pledging to implement prudent monetary policy and keep liquidity reasonably ample. PBOC will focus on stabilizing employment and prices and will seek ways to help reduce corporate financing and consumer credit costs. Other measures cited by the central bank on Thursday included speeding up the use of special loans to ensure housing sales are completed and plans to guide commercial banks to provide financing support for the scheme. PBOC also pledged to keep the yuan exchange rate basically stable, enhance currency flexibility, strengthen expectation management and guide firms and financial institutions to adhere to the concept of “risk neutrality.”

— China plans big Q4 treasury bond issuance to support its economy. China’s finance ministry plans to issue about 2.5 trillion yuan ($347.4 billion) in treasury bonds in the fourth quarter to help underpin the slowing economy, two sources with direct knowledge of the matter told Reuters. That would be a 21% jump from the amount of bonds issued in the fourth quarter of last year. The ministry has also urged local governments to complete issuing the roughly 500 billion yuan in special bonds by the end of October under carryover quotas from previous years, the sources said.

— USTR official vague on possible U.S./U.K. trade deal, TPA renewal. The Biden administration is still trying to figure out its strategy on how to pursue the trade relationship with the U.K., Deputy Assistant US Trade Representative (USTR) for Agricultural Affairs Leslie Yang acknowledged to members of the National Association of State Departments of Agriculture (NASDA). She said examination of the free trade agreement (FTA) negotiations begun under the Trump administration is still ongoing and the decisions on the next steps will not happen until that is completed.

Lang was also vague when asked about whether the administration would push for renewal of Trade Promotion Authority (TPA) which allows an administration to negotiate trade agreements and for Congress to vote on it via an up-or-down vote tally with no amendments.

Perspective: Some veteran trade policy analysts say the hesitancy to inking new trade accords and using whatever political capital they have to push for TPA renewal show trade policy is not a priority in the Biden administration.

— The SEC is willing to revise its plan to require corporate reporting on greenhouse gas emissions and other climate matters to address any valid concerns about compliance costs, Chair Gary Gensler said.

— Some nuggets from the daylong Biden administration focus on the long-standing problem of hunger in the United States:

• Where’s Jackie? After President Biden called out and searched for the late Rep. Jackie Walorski (R-Ind.) at the summit, the White House struggled to respond to the glitch. Walorski died in a car crash in early August and Biden is scheduled to meet with her family later this week. Asked by a reporter why the president appeared to think that Walorski was “living and in the room,” press secretary Karine Jean-Pierre responded: “I don’t find that confusing. I think many people can speak to sometimes, when you have someone top of mind, they are top of mind. Exactly that.” A normally Democratic-tilted White House press corps was bewildered. Doug Andres, spokesman for Senate Minority Leader Mitch McConnell (R-Ky.), tweeted, “Just admit he misspoke!! good grief.” The Washington Post recalls that Biden has a long history of gaffes and mistakes, a tendency he regularly makes light of himself. During a 2008 campaign event, he paused at an event and asked a man in a wheelchair to stand up and be recognized. He once said that the Obama administration was focused on a “three-letter word: jobs. J-O-B-S. Jobs.”

  Counterpoint: At one point James Rosen, the chief White House correspondent for Newsmax, shouted out, “I have John Lennon top of mind just about every day, but I am not looking around for him anywhere.” The late Beatles member was killed in 1980. “When you sign a bill for John Lennon as president, then we can have this conversation,” Jean-Pierre shot back.

• Biden wants to lower income thresholds to make nine million more children in high-poverty communities eligible for free school meals, a measure Biden called “a major first step toward free meals for each student.” A pandemic-era program that provided free breakfast and lunch to all schoolchildren expired this school year. Republicans voted against Democratic efforts to include universal free school meals in this week’s stopgap government funding bill and have expressed skepticism about other programs to expand free school meals. The president also urged making permanent the Summer EBT program, which gives low-income families money to buy groceries during the summer when children don’t have access to school meals. Link to Biden speech.
• Opportunities for more food & nutrition funding ahead. Senate Agriculture Committee Chair Debbie Stabenow (D-Mich.) and House Appropriations Committee Chair Rosa DeLauro (D-Ct.) pointed out two upcoming opportunities to improve food and nutrition policy — the farm bill reauthorization and the annual appropriations process. Republicans will inevitably propose cuts to SNAP in the 2023 farm bill, as they did in the 2014 and 2018 bills, said Stabenow. “And I say, we’re not going to cut food stamps,” she said. “We need your help, because No. 1 is to not go backwards on public nutrition.” But not losing ground isn’t enough, she said. “We have to build and build and build.” “The farm bill is every five years. Friends, appropriations is every single year,” added DeLauro. She urged Biden to put the Child Tax Credit expansion in the 2024 budget “so that we can deal with it and move on.”
• $8 billion: Officials announced they had secured $8 billion in commitments from public and private entities toward helping provide more food and better nutrition in coming years. The commitments underscore the Biden administration’s reliance on the private sector to meet its goals of ending hunger by 2030 and prompting healthier eating habits.
• Efforts were launched to make healthy food more affordable and accessible, provide more options for physical activity, and bolster research on food and nutrition
• Fair wages, collective bargaining rights. Biden reiterated his support for fair wages and collective bargaining rights for the workers who “grow, produce, and process our food.” As part of its anti-hunger strategy, the administration proposed raising the federal minimum wage to $15 an hour.
• Rep. Jim McGovern (D-Mass.), the House Rules Committee chair who spearheaded the effort for the conference, praised the Biden administration for making hunger and nutrition a national priority. But he also acknowledged that the conference was only a beginning, saying, “We need to leave here with an assignment for tomorrow. And for next week and the week after that. This is an opportunity. We can’t blow it.” He called for a bipartisan effort to “make history” and “transform this country where 35 million people don’t know where their next meal is going to come from into a country where hunger is illegal or doesn’t exist at all.”
• Some Republicans criticized the confab. Rep. GT Thompson (R-Pa.), Republican leader of the House Ag Committee, called it “nothing more than a political stunt.” Rep. Virginia Foxx (R-N.C.), senior Republican on the House Education Committee, which oversees child nutrition, said the administration had prioritized liberal activist groups instead of a diverse range of stakeholders to “set up this conference to be forgotten before it even started.”

— FDA is proposing changes to the nutrition standards that foods must meet before they can carry the “healthy” label on their packages. Foods that make the claim would need to have limits on individual nutrients like fat, saturated fat, cholesterol and sodium, and they must contain minimum amounts of vitamins A and C, calcium, iron, protein and dietary fiber. But since the “healthy” claim was first defined in 1994, the FDA said an update was needed to reflect changes in nutrition and dietary science. For example, certain cereals that have high amounts of added sugars still meet the definition of “healthy,” but salmon — which is high in beneficial polyunsaturated fat — does not. The FDA said the goal of the proposal is to help consumers improve their dietary patterns.

— Summary:

• Global Covid-19 cases at 161,682,588 with 6,542,195 deaths.
• U.S. case count is at 96,249,182 with 1,058,506 deaths.
• Johns Hopkins University Coronavirus Resource Center says there have been 616,172,307 doses administered, 268,373,101 have received at least one vaccine, or 81.45% of the U.S. population.

— Moderna is seeking authorization for children as young as 6 years and Pfizer for children as young as 5. Like the boosters that became available for older people earlier this month, these shots target the original coronavirus strain as well as the Omicron BA.4/BA.5 subvariants. Pfizer’s updated booster is currently authorized for use in people 12 and older and Moderna’s is authorized for adults age 18 and older.

— Republicans regaining ground on midterms: PredictIt. Republicans are regaining some ground, with their chances of taking control of the Senate in November rising to 43% on Tuesday, up from 35% in late August, according to betting market PredictIt (link). While down from the 79% peak in April, some analysts say high inflation could explain the shift.

— Karl Rove predicts 20 GOP House net gains. The former advisor to President George W. Bush, writing in the Wall Street Journal (link) says” “The red wave will likely generate a smaller midterm swing than the average, which since 1934 has been 28 House seats. Republicans are likely to gain closer to 20 than 25. But that’s partly because the GOP got a head start in 2020 by picking up 14 House seats. A net gain of 20 seats this fall would give Republicans 233 — the GOP had 230 in 1995 when Newt Gingrich was elected speaker.” With House elections tilting toward Republicans, Rove wrote: “The problem for Democrats is that abortion and climate are less important to voters than pocketbook and safety concerns. When asked in the ABC News/Washington Post poll to pick their “most important” issue, 26% chose the economy, 21% inflation and 14% crime, making the GOP agenda the main focus of 61% of voters. By contrast, 22% picked abortion and 13% climate change, leaving 35% of the electorate prioritizing the Democratic agenda.”

Swing voters are another problem for Democrats, Rove details. “Independents are closer in their opinions on major issues to the GOP. In a Sept. 14 New York Times poll, 54% of independents said economic issues would be “most important” in deciding their vote, while 27% picked “societal issues such as abortion, guns or democracy.” On the economy, 55% of independents agreed with the GOP and 31% with Democrats; on illegal immigration, 50% picked Republicans, 34% Democrats; and on crime and policing, they went 49% GOP, 31% Democratic.”

Rove’s predictions for the Senate will come via his WSJ column next Thursday.

— Sabato’s Crystal Ball moved the Michigan and Pennsylvania gubernatorial races from “Leans” to “Likely Democratic.” Link for details.

— Some recent poll results:

• Georgia: Democratic Sen. Raphael Warnock leads Republican Herschel Walker, 46% to 41%, while Republican Gov. Brian Kemp leads Stacey Abrams, 50% to 43%, per a new Fox News poll (link).
• Pennsylvania: Fetterman leads Oz, 45% to 41%. In the Pennsylvania governor’s race, Democrat Josh Shapiro leads Doug Mastriano, 51% to 40%, per a new Fox News poll (link).
• Arizona: Democratic Sen. Mark Kelly has a 10-point lead over Blake Masters, 51% to 41%, among registered voters, per a new Marist poll (link). Among those who say they will definitely vote, the lead is 50% to 45%. And in the gubernatorial race, Republican Kari Lake leads Katie Hobbs, 46% to 45%, among all voters — though her lead is larger among those who say they’ll definitely vote: 49% to 46%.

— Here’s what one of Pro Farmer’s election-year watchers says: “RCP (Real Clear Politics) generic has Rs back in the lead. RCP averages are decent for Rs in the Senate. Johnson, Vance, Laxalt all lead. Warnock up but within a tenth of a percentage point so well within the margin of error. Fetterman and Kelly are both up by north of 4 and 5 percentage points. Those two probably have some edge but that’s not that far outside the margin of error and polls tend to understate R votes in favor of Ds. I think 2022 is shaping up to be a good year for the Rs.”

— Congress’ schedule:

The House meets at 10 a.m. ET and will take up bills including a package of antitrust measures.

Senators gather at 10 a.m. ET to debate the stopgap deal and vote on a judicial nominee.

— Bank trade groups sue the Consumer Financial Protection Bureau (CFPB). The organizations accused the financial regulator of overstepping its bounds by requiring banks to submit tests of how their policies may discriminate against certain groups, including racial minorities, without proper consultations or legislation. The U.S. Chamber of Commerce, American Bankers Association and several other trade groups Wednesday asked a federal court in Texas to stop the CFPB from looking for discriminatory behavior when conducting routine examinations of financial firms. Rather than propose a rule and seek public comment, as the plaintiffs say it should have, the agency implemented the policy by changing its examination manual. A CFPB spokeswoman said the agency voluntarily publishes its manuals to be transparent.

Note this: The lawsuit claims the agency is overstepping its authority, and is among the first to argue against a federal regulator by pointing to a recent Supreme Court ruling, West Virginia v. EPA. In the EPA case, the Court’s conservative majority sharply limited the authority of the environmental agency to regulate carbon emissions.

— California makes it easier for farmworkers to unionize. Gov. Gavin Newsom signed a bill that allows workers to vote in union elections by mail, instead of in person, often on a grower’s property. Supporters of the measure say it will help reduce the possibility of retaliation.

— EPA rejects pesticide petition. EPA denied a petition by environmental groups demanding that it regulate pesticide-coated seeds in a way that would protect bees and other pollinators.

— ‘Ag-gag’ unlawful. A U.S. district court judge ruled that Iowa’s latest attempt to criminalize the use of cameras in agricultural facilities and other businesses is unconstitutional. It’s the third adverse decision in five years for the state’s so-called ag-gag law. Link for details.

— Here comes the Judge. He finally smacked number 61, tying the American League record, but a fan in the stands with a glove booted it. Yankees outfielder Aaron Judge hit his 61st home run in Toronto, tying the American League record for most in a single season set by Roger Maris in 1961.

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