Hurricane Ian Nears Category 5 with Max Sustained Winds of 155 MPH as Fla. Governor Warns of ‘Nasty’ Days Ahead

Russia suspected of pipeline sabotage | Putin again comments on Ukraine grain export deal

Sen. Joe Manchin (D-W.Va.) asked Senate Majority Leader Chuck Schumer on Tuesday to remove his energy permitting package from a short-term government funding bill. Quickly after, the spending bill cleared a key Senate procedural vote and could pass as early as today, but more likely Thursday. Schumer said on the floor that he and Manchin would “continue to have conversations about the best way” to move forward on the permitting effort before the end of the year. Main reason why Manchin caved: His plan faced opposition from progressive House Democrats over climate concerns, and from Republicans still upset over Manchin’s turnabout role in the reconciliation measure. It shows again that that in Congress, it’s far easier to stop something than to get something. Bottom line: Manchin caved and lost. The continuing resolution drama is over except expected passage by both chambers. As for Manchin’s dropped permitting language, he will attempt to attach it in the lame duck session via the annual defense policy bill or the next government funding bill that will be needed in December. Another lesson how Congress works: Very slow, usually except very fast with a crisis at hand (in this case, a potential gov’t shutdown).

Bank of England warns of ‘material risk’ to U.K. financial stability as it steps in to prop up gilt (bond) market. The Bank of England took emergency action today to stem a crisis in government bond markets, suspending its program to sell gilts and instead buy long-dated bonds. Britain’s banking sector is coming under renewed pressure Wednesday, with shares in Barclays, HSBC, Lloyds and NatWest all dropping more than 3%, building on a recent selloff. Meanwhile, the IMF in a rare statement said the new economic measures laid out by the U.K. government “will likely increase inequality.” Bottom line: “Clearly, there is a fundamental conflict between the Truss government’s so-called growth program of large-scale spending and the Bank’s need to reduce inflation.” — Adam Posen, president of the Peterson Institute for International Economics and a former BOE policymaker.

U.S. 30-year fixed mortgage rates hit 7.08%.

Do you agree? Markets are functioning well, White House economic adviser Brian Deese said, and there probably won’t be another Plaza Accord to counter dollar strength. “I don’t anticipate that that’s where we’re headed.” His comments came after Janet Yellen suggested there was little cause for concern with current moves in financial markets. Markets took notice with the dollar rallying after Deese’s comments, setting a new record. The global bond rout deepened, and 10-year Treasury yields touched their highest level since 2008. The dollar soared to another record after the White House talked down the prospect of weakening the currency.

European countries are on high alert after mysterious blasts hit two Russian gas pipelines this week, fueling suspicions of potential sabotage. Although neither pipeline had been operational, they both held gas that is now leaking into the Baltic Sea. “The probability would be zero that this is accidental or natural,” said Henning Gloystein, an energy expert at the Eurasia Group, who added that it is “almost certainly an act of sabotage.” Price movement: Benchmark Dutch natural gas front-month futures closed up 7% to €186.10/Mwh on Tuesday, while U.K. natural gas futures jumped by as much as 34% before settling 6.2% higher at £255.65/MWh. Details in Energy section.

China’s yuan hit its weakest ever offshore trading level against the U.S. dollar, breaking 7.2 against the dollar. More in China section.

Russia has declared victory in a series of referendums that took place over the past week in the Donetsk, Luhansk, Kherson and Zaporizhzhia regions. The U.S. is busy preparing a new round of sanctions against Russia should it annex the territories, as well as another $1.1 billion arms package to aid Kyiv. Meanwhile, the Ukrainian offensive that ousted Russian troops from the Kharkiv region early this month has crossed deep into the northern part of the nearby Donetsk region, increasingly threatening Russian control over the lands it seeks to annex. More in Russia/Ukraine section.

Today we have policy updates on:

• White House hunger conference
• Lawsuit aims to stop Biden’s student loan forgiveness plan, its first significant legal challenge
• House Energy panel chairman has a new plan for the SPR
• All 50 states get green light to build EV charging stations covering 75,000 miles of highways
• Vilsack announces administration is making $500 million in grants available to increase American-made fertilizer production
  

Senate Ag Committee cleared three Biden nominees for a floor vote: Alexis Taylor for agriculture undersecretary for trade, Jose Esteban for agriculture undersecretary for food safety and Vincent Logan to serve on the Farm Credit Administration board.

A late-stage clinical trial showed promising results for an Alzheimer’s drug developed by Biogen and Eisai.

Florida is preparing for the arrival of Hurricane Ian after the intensifying storm knocked out Cuba’s entire electric grid early on Tuesday. About 2.5M people along the U.S. Gulf coast have been urged to evacuate. While estimates are being revised by the hour, Ian will likely crash ashore this evening south of Tampa Bay — somewhere between Sarasota and Naples —as a potentially deadly Category 4 hurricane. Economic losses in the area could exceed $45 billion if the current forecast comes to pass, ranking Ian as the eighth-costliest U.S. hurricane. It could also exacerbate food inflation if the storm takes a direct hit on key orange-growing producers.

Election Day 2022 is 41 days away. Election Day 2024 is 769 days away.

Equities today: Global stock markets were mostly lower overnight. U.S. Dow opened around 100 points higher than saw initial pressure. London stocks and the British pound fell Wednesday after the Bank of England said it would buy U.K. government bonds to “restore orderly market conditions” in the wake of warnings from the International Monetary Fund and rating agency Moody’s that Prime Minister Liz Truss’s plan to slash taxes could hinder the country’s economic growth. In Asia, Japan -1.5%. Hong Kong -3.4%. China -1.6%. India -0.9%. In Europe, at midday, London -0.3%. Paris -0.3%. Frankfurt -0.4%.

U.S. equities yesterday: The Dow ended down 125.82 points, 0.43%, at 29,134.99. The Nasdaq rose 29.58 points, 0.25%, at 10,829.50. The S&P 500 was down 7.75 points, 0.21%, at 3,647.29. BMO Capital Markets said 66% of S&P 500 stocks are trading below their historical forward price-to-earnings multiples, compared to 40% at the end of 2021.

The S&P 500 is now 24.3% below its record set in January, while the Dow is 21.2% below its all-time high. The Nasdaq has fallen more than 33% since hitting a record in November.

$9 trillion and counting. American households lost $9 trillion in wealth in the first six months of 2022 due to the stock market plunge, per the Federal Reserve.

Apple reportedly calls off production bumps for its new iPhones. The tech giant told suppliers to cancel plans to increase manufacturing of the iPhone 14 line, after expected heightened demand didn’t come to pass, Bloomberg reports (link). Rising inflation and fears of recession may be to blame. Shares were down nearly 4% in premarket trading this morning. Demand for higher-priced iPhone 14 Pro models is stronger than for the entry-level versions, according to some reports. In at least one case, an Apple supplier is shifting production capacity from lower-priced iPhones to premium models.

Agriculture markets yesterday:

• Corn: December corn futures rose 1 1/4 cents to $6.67 1/2, near the bottom of the day’s range.
• Soy complex: November soybeans fell 3 1/4 cents to $14.08, the contract’s lowest close since Sept. 8. December soymeal dropped $3.90 to $413.60. December soyoil fell 7 points at 62.39 cents.
• Wheat: December SRW wheat rose 13 1/2 cents to $8.71 1/2, while December HRW rose 13 3/4 cents to $9.43 1/4. December spring wheat rose 12 cents to $9.43 1/4.
• Cotton: December cotton fell 1 point to 88.36, the contract’s lowest closing price since July 14.
• Cattle: December live cattle fell 45 cents to $146.90, the contract’s lowest close since July 21. November feeder cattle dropped 77.5 cents to $176.275.
• Hogs: December lean hogs fell $3.15 to $76.25, the lowest close since December 2021. The CME lean hog index fell 60 cents to $96.99, the lowest since mid-February, and is expected to drop another 60 cents today.
  

Ag markets today: Wheat futures firmed overnight, while soybeans faced mild selling pressure and corn was caught in the middle. As of 7:30 a.m. ET, corn futures were trading fractionally on either side of unchanged, soybeans were around 3 cents lower and wheat futures were 7 to 11 cents higher. Front-month crude oil futures were near unchanged, while the U.S. dollar index was nearly 600 points higher and trading at a fresh 20-year high.

Technical viewpoints from Jim Wyckoff:

On tap today:

• U.S. advance economic indicators report for August is out at 8:30 a.m. ET.
• U.S. pending-home sales for August, due at 10 a.m., are expected to fall 1.4% from the prior month.
• Federal Reserve speakers: Atlanta’s Raphael Bostic on leadership in banking at 8:35 a.m. ET, St. Louis’s James Bullard welcoming remarks at a banking conference at 10:10 a.m. ET, Chairman Jerome Powell prerecorded welcoming remarks at a banking conference at 10:15 a.m. ET, gov. Michelle Bowman on banking competition at 11 a.m. ET, and Chicago’s Charles Evans on the economy and monetary policy at 2 p.m. ET.
• President Biden will go to the Ronald Reagan Building, where he’ll speak at the White House Conference on Hunger, Nutrition, and Health at 10 a.m. ET. USDA Secretary Tom Vilsack and many others will also speak at the event.

Federal Reserve Bank of Minneapolis President Neel Kashkari said the U.S. central bank needs to tighten monetary policy until underlying inflation is declining, and then wait to see whether it has done enough. “The one mistake that I’m acutely aware of — that I want to avoid repeating from the 1970s — is when policy makers saw the economy weakening, saw inflation start to tick down, and then they cut rates, thinking they had done the job. And then inflation flared back up again — that, I believe, is a mistake we cannot make and will not make,” Kashkari said Tuesday. The Fed has raised interest rates aggressively this year to reduce inflation, which remains near its highest rate in 40 years.

It’s unclear whether the Truss government will change course. Britain’s chancellor of the Exchequer, Kwasi Kwarteng, is set to meet with top bank executives today to discuss the fiscal plans. In meetings with other business leaders, Kwarteng professed confidence in the policy moves, though he added that the government would maintain “fiscal discipline.” Growing unease among lawmakers in the governing Conservative Party may force a shift, however, as polling shows the Tories falling behind the opposition Labor Party.

Market perspectives:

• Outside markets: The U.S. dollar index is higher again as most foreign rival currencies are weaker against the greenback. The yield on the 10-year U.S. Treasury note is rising and presently fetching 3.896% after rising above 4.0% overnight. The 2-year Treasury note yield is 4.4%. Crude is firmer, with US crude around $78.95 per barrel and Brent around $85.30 per barrel. reports began to circulate yesterday morning that Russia may push for a production target cut at next month’s OPEC+ meeting according to anonymous member sources. WTI futures ended the day up 2.46% after trading with a $76 handle for the first time since early January. Gold and silver futures are under pressure, with gold around $1,631 per troy ounce and silver around $18.06 per troy ounce.

• U.S. Treasury yields climbed above 4% for the first time in more than a decade. Yields on two-year and 10-year Treasurys are on pace for the biggest yield gains through the first three quarters of a year since 1981. Perspective: The 10-year Treasury climbed 4 basis points overnight to breach the key 4% level, but then they went to 3.861% amid volatility in the market. The last time of 4% happened was in 2008, at the height of the global financial crisis. It’s even more astonishing when considering the pace of the yield’s ascent, with the benchmark sitting at only 1.50% at the start of the year. “Bond yields gravitating toward or above 4% means markets are pricing in tighter policies for longer,” noted Daniel Tenengauzer, head of markets strategy at BNY Mellon. “In my opinion, it’s the realization that bond yields are highly unlikely to revert to a lower range in the medium to longer term, given higher inflation and tighter policy for longer, that’s having an impact.”

• After three months of falling gas prices, the average price for a gallon in the U.S. increased for the seventh consecutive day Tuesday — hitting a high of $6.036 in California and also jumping over the $5 threshold in Nevada, Oregon and Washington. Tightening supply is fueling the surge, with Russia escalating its war in Ukraine and Hurricane Ian jeopardizing oil production in the Gulf of Mexico. Link for details via AAA.

• Lumber prices have fallen to their lowest level in more than two years, the WSJ reports (link), bringing two-by-fours back to what they cost before a pandemic building boom and pointing to a sharp slowdown in construction. Lumber futures are down about one-third from a year ago and more than 70% from their peak in March, when the Federal Reserve began raising interest rates. The result illustrates how changes in various parts of the economy can ripple through supply chains down to the level of raw materials. The U.S. housing market has been sagging, with building permits for residential construction declining steadily since March. Rail shipments of lumber are dropping, too, with forest-products carloads down 13% last week compared with the same week a year earlier, according to the Association of American Railroads.

• Lean hog prices fell to their lowest levels of the year, dragged down by worries about slowing economic growth in Asia. The continuous contract trading on the CME recently declined 3.9% to below 77 cents per pound. That would mark its lowest close since November 2021.

• Ag trade: The Philippines tendered to buy up to 50,000 MT each of feed wheat and feed barley.

• Hurricane Ian is expected to reach Florida’s Gulf Coast as early as this afternoon. This morning, the national Hurricane Center said winds had reached 140 mph, strengthening to a Category 4. President Joe Biden spoke with Florida Gov. Ron DeSantis on Tuesday night “to discuss the steps the Federal government is taking to help Florida prepare for Hurricane Ian,” White House press secretary Karine Jean-Pierre said in a statement, adding that Biden and DeSantis “committed to continued close coordination.” Ian caused a blackout in Cuba and is the first major hurricane expected to hit areas such as Tampa since 1921. 100 years ago, the population of the Tampa Bay area was 130,000. Now, it’s a sprawling region of 3.2 million.

Looking ahead, the National Hurricane Center (NHC) said that the storm will bring heavy rains across the Florida peninsula through Thursday and reach portions of the Southeast later this week and weekend.” The NHC said that considerable flooding can be expected in southern Florida, northern Florida, southeast Georgia, and coastal South Carolina. The storm is expected to weaken after it makes landfall. Attention will be on citrus areas in Florida which could be at risk from storm-related damage and on cotton in Georgia and South Carolina. USDA reported as of Sept. 25, 74% of cotton bolls were open in Georgia and 66% in South Carolina, putting them at a stage where losses could occur from heavy rains. USDA said 3% of Georgia cotton had been harvested as of Sept. 25 with 5% of the South Carolina crop harvested. Georgia’s state statistics service noted that cotton producers on southeastern parts of the state had been applying defoliant last week in anticipation of the storm to potentially get those fields harvested. South Carolina reported similar activities taking place ahead of the storm.

• NWS weather: The core of Major Hurricane Ian is forecast to make landfall on the west coast of Florida late today/tonight; Ian’s interaction with a front will likely prolong impacts from high winds, heavy rain, and flooding even for areas further inland... ...Cool and rainy weather over the Great Lakes today; cool and dry weather for the rest of the eastern half of the country but heavy rain and strong winds from Ian is forecast to edge toward the Southeast U.S. on Friday... ...Well above average temperatures persist across much of the West, with excessive heat continuing over parts of southern California, followed by arrival of rain and cooler temperatures over the Pacific Northwest later today and into the northern Rockies on Thursday.

Items in Pro Farmer’s First Thing Today include:

• Wheat firms, beans weaken and corn trades mixed
• Argentine soybean sales slow after FX crackdown
• Lagarde: Inflation a bigger focus than economic growth
• Indonesia lowers crude palm oil reference price
• Slow start to cash cattle negotiations
• Overly pessimistic in hogs again

— Mass exodus from Russia. To escape Russian President Vladimir Putin’s partial mobilization order, nearly 200,000 Russians have now entered Kazakhstan, Georgia, and Finland, while satellite images show a ten-mile-long line of vehicles attempting to cross into Georgia. Kazakh officials said they would only repatriate the fleeing men if they were internationally wanted. “We must take care of them and ensure their safety. It is a political and a humanitarian issue,” said Kazakh President Kassym-Jomart Tokayev. “I tasked the government to take the necessary measures.” Meanwhile, U.S. and Europe are preparing new sanctions on Russia after the Kremlin’s nuclear threats.

• Russia’s costly troop mobilization. Plunging energy prices and a new round of Western sanctions threaten to bear down on Russia’s already embattled economy and undermine the financial underpinnings of President Vladimir Putin’s war in Ukraine. The Kremlin’s decision to call up more than 300,000 soldiers will require new funds to equip, train and pay the new reinforcements, analysts said. It has also spread disruption among Russia’s private businesses, which face a fresh challenge as workers report for duty or flee the country. And it is happening as the windfall from soaring energy prices — Russia’s main economic strength — appears to have peaked.

• U.S. embassy in Russia is urging any Americans in the country to leave and for U.S. citizens to not travel to Russia as Russian President Vladimir Putin orders a call up of 300,000 reservists to aid depleted forces in Ukraine.

• Putin again slams West’s predatory food ‘swindle.’ The U.S. and its rich allies are causing a global food crisis by draining the market, the Russian president said. “Predatory” monetary and trade policies pursued by the U.S. and its allies are the primary cause of the global food crisis, Russian President Vladimir Putin said. Western nations are using their wealth and ability to print money to vacuum up food products from the global market, the Russian leader said during a government meeting on Tuesday. The unfolding crisis has been in the making for several years, he claimed. “Some leading nations have financial and food policies that led to the result we are observing now,” Putin said, adding that the behavior could be described as “predatory, without any exaggeration.” He noted that the U.S. was a net exporter of food products last year, but now it is a net importer. (USDA is forecasting a trade deficit in agriculture for FY 2023 of $3.5 billion so that means net importer.)

  Putin reiterated his criticism of the Ukraine grain deal, which allowed Kiev to export food via the Black Sea. The arrangement was mediated by the U.N. and Turkey, but Russia believes it is not working as intended, arguing that the shipments do little to alleviate food shortages in needy nations. Putin cited last week’s maritime traffic statistics in relation to the scheme, pointing out that most of the ships carrying Ukrainian grain that didn’t report Turkey as their destination went to one of the EU nations. “Are they the poorest nations or what? The situation remains the same. Embarrassing as it sounds, but this is plain swindle, and nothing else,” he said.

  Russia is set to harvest a record amount of grain this year, which is predicted to reach 150 million tons, including some 100 million tons of wheat, Putin said. But Russian food products have a difficult time finding their way to the global market due to Western economic sanctions, as do Russian fertilizers, he added. The West “is causing the global food crisis,” he claimed. The U.S. and its allies deny that the restrictions they have imposed on Russian trade over the country’s military campaign in Ukraine are targeting its food and fertilizer exports. Officials in Moscow say that, while those products are technically not banned, restrictions on things like insurance and port services for Russian merchant ships effectively curb the country’s ability to export food and fertilizers.

— You knew it was coming… Lawsuit aims to stop Biden’s student loan forgiveness plan, its first significant legal challenge. The lawsuit filed by the Pacific Legal Foundation says the executive branch lacks authority to unilaterally cancel the debt. The suit’s plaintiff, a public interest attorney at the foundation, also said President Biden’s plan to cancel up to $20,000 in federal student loan debt for millions of borrowers also would force him to pay state taxes on the forgiven amount.

— The Senate will approve a stopgap funding measure. Legislation to keep the federal government running past Friday passed a critical test last evening, staving off a shutdown threat. Key to its passage was dropping a provision to ease the building of energy projects that had been championed by sometimes-centrist Sen. Joe Manchin (D-W.Va.). The House is widely expected to follow the Senate later this week.

The CR would extend the USDA’s livestock mandatory price reporting system through mid-December.

— Senate Ag Committee advances USDA, Farm Credit nominees. The panel Tuesday evening voted in favor of the nominations of Alexis Taylor to be USDA undersecretary for trade and foreign agricultural affairs, Jose Emilio Esteban to be USDA undersecretary for food safety and Vincent Garfield Logan to be a member of the Farm Credit Administration’s Farm Credit Administration Board via votes of 22-0. The panel also approved Jose Emilio Esteban to be USDA undersecretary for food safety, but on a 21-1 vote as Sen. Cory Booker (D-N.J.) voted no. They await a vote in the full Senate where they are expected to easily win approval.

— Treasury secretary eyed in White House midterm shake-up: Axios. White House officials are weighing the possible departure of Treasury Secretary Janet Yellen after the November elections as part of a Cabinet shake-up, according to a report (link). The decision is not final and is expected to hinge on the outcome of the midterm elections, sources familiar with the matter told Axios. Yellen’s successor will need to be confirmed by the Senate, posing a challenge if the Republican Party takes control of the upper chamber. This is not the first time speculation about Yellen’s fate has surfaced. Officials are also considering whether Brian Deese, the director of the National Economic Council, could leave in the new year, according to the outlet. Deese, speaking at the Economic Club of D.C. on Tuesday, said he had “no plans to leave” the Biden administration. “I’ve got my head down, and I’m certainly fully, fully absorbed in the work we’re doing,” Deese added. Treasury spokeswoman Lily Adams said Yellen has no plans to leave.

— China’s currency hit its weakest-ever offshore trading level against the U.S. dollar, with the yuan falling below 7.2 to the dollar for the first time since a separate system for trading the currency outside mainland China was launched more than a decade ago. The move caps a fall of about 12% for the offshore yuan against the dollar this year and comes despite repeated attempts by China’s central bank to support its currency. The U.S. dollar has gained against currencies around the world amid a campaign of aggressive interest rate increases by the Fed.

— China’s Xi Jinping re-emerges in public. The Chinese leader is taking center stage ahead of a Communist Party conclave at which he is expected to secure another term in power.

— China’s sow herd grows fractionally in August. China’s sow herd totaled 43.2 million head at the end of August, according to local media, citing ag ministry data. That was a 0.6% increase from July.

— Biden looks to win over Pacific Island leaders at summit. President Biden today is set to host Pacific Island leaders for a two-day summit as the U.S. looks to counter China’s military and economic influence in the region. Secretary of State Antony Blinken will kick off the summit with a luncheon for the Pacific Island leaders and other senior officials from the region. U.S. climate envoy John Kerry will hold a climate roundtable with the leaders, and White House national security adviser Jake Sullivan will join them for a dinner hosted by the U.S. Coast Guard. Biden is slated to address the leaders at the State Department on Thursday and will host them for a dinner at the White House. The leaders also are to meet with House Speaker Nancy Pelosi, Commerce Secretary Gina Raimondo and U.S. business leaders.

American efforts to rally Pacific island leaders at a White House summit this week were dealt a blow when the Solomon Islands said it would not endorse a joint declaration that the Biden administration plans to unveil.

— Vilsack: Potential USMCA action re: Mexico GMO rules. Mexico is poised to put into effect regulations that ban the import of GMO corn in 2024, something which would halt a major U.S. export destination for corn used as livestock feed. USDA Secretary Tom Vilsack said that he has continued to hold discussions with key Mexican officials, including Mexico’s president. He said Tuesday that more clarity on the situation will become evident in the coming months and said that the U.S. could pursue action under the U.S.-Mexico-Canada Agreement (USMCA). Mexican officials have repeatedly said the ban would apply only to corn imported for food use and not livestock feed, but others say the language is not clearly stated in any of the orders issued thus far.

— House Energy panel chairman has a new plan for the SPR. A House Democrat proposal would graduate the Strategic Petroleum Reserve (SPR) from being primarily an emergency store used to supplement global oil supplies during war- or storm-related supply disruptions to a market intervention tool meant to protect consumers any time prices are high. Energy and Commerce Chairman Frank Pallone’s (D-N.J.) Buy Low and Sell High Act, introduced with support from eight of his fellow Democrats, seeks to give the Department of Energy and the president new authorizations to sell reserve oil any time prices exceed $90 per barrel, potentially making the kinds of interventions that have characterized President Joe Biden’s energy policy into a market fixture. Link to Pallone release.

Details: The bill would allow the president to designate an “Economic Petroleum Reserve” (EPR) to subsist within the SPR and which could consist of no more than 350 million barrels of oil. The Energy Department would then be permitted to purchase domestically produced crude oil sold at $60 per barrel or below to fill the EPR and then to sell the oil when WTI exceeds $90 per barrel.

Pallone said the bill was “designed to continue the trend of falling gasoline prices,” giving credit to Biden’s multiple and large-scale draws from the reserve for the falling oil and gas prices, and it would give an administration “the flexibility it needs to keep prices falling.” A recent Treasury Department analysis suggested that Biden’s emergency releases, in combination with the 60 million barrels made available by partners, may have been responsible for lowering the price of gasoline by between 17 cents to 42 cents per gallon this summer.

Price trigger vs. physical trigger. Raoul LeBlanc, vice president for energy with S&P Global Commodity Insights, said that for centering itself on price, rather than a shortage of physical volumes, the proposal could be an improvement upon current management of the reserve. “The only problem with [a physical trigger] is that the modern crude oil market is so flexible and fungible at redirecting volumes,” LeBlanc told the Washington Examiner. “The notion that the U.S. will have a physical shortfall is pretty remote.” The price trigger, which would lay out clearer ground rules as to where and when the government could intervene, could then take some of the political calculation out of the equation, LeBlanc said. “Before it was always a question of, well, should we intervene or not when there’s no real mechanism,” he said. “So, it got to be a political football. This one at least has the possibility to depoliticize that.”

For Pallone, more intervention “helps us regain control of domestic gas prices and protects drivers from future price fluctuations.”

For LeBlanc, “Putting the government in as an actor in a very commercial, pretty mature, globalized sector — you can do it, and it may work, but it’s certainly not as easy as it sounds.”

— Sabotage fears amid Nord Stream gas leaks. European leaders are racing to investigate potential acts of sabotage after both the natural gas pipelines linking it to Russia suffered inexplicable and sudden leaks — resulting in unprecedented damage as the bloc scrambles to transition away from Russian fossil fuels. The leaks squashed ideas Europe could still receive any additional gas via Nord Stream 1, the largest single supply line linking Russia to Europe, before winter. Though neither pipeline was operational at the time, both lines were filled with gas under pressure. Footage released by the Danish Defense Command showed a swirling mass of methane bubbling up onto the surface of the Baltic Sea. Officials in Denmark raised its security alerts at electricity and gas facilities around the country.

Timing of the leaks was significant, occurring just hours before a ceremonial launch of the Baltic Pipe, the natural gas pipeline linking Norway to Poland. The opening of the pipeline, which will bring Norwegian supplies through Denmark to Poland, is seen as a major step to mark the EU’s transition away from Russian gas.

Danish Prime Minister Mette Frederiksen said she “cannot rule out” sabotage in the leaks — two of which occurred on the Nord Stream 1 pipeline and the other on Nord Stream 2, which never opened for commercial operation due to Russia’s invasion of Ukraine. “It is too early to conclude yet, but it is an extraordinary situation,” Frederiksen said. “There are three leaks, and therefore it is difficult to imagine that it could be accidental.”

Polish Prime Minister Mateusz Morawieck, in comments at the opening ceremony for the new Baltic pipeline, said: “Today we faced an act of sabotage, we don’t know all the details of what happened, but we see clearly that it’s an act of sabotage, related to the next step of escalation of the situation in Ukraine.”

Now what? Ships were instructed to avoid the area, and the Danish Energy Authority declared a state of emergency over the leaks. Attacks on infrastructure could signify a new phase in Russia and Europe’s battle for energy, said Alex Munton, an expert on global gas markets at Rapidan Energy Group, a consultancy. This is “an escalation in the conflict with potentially direct attacks on physical infrastructure,” he said. “The implications are: what other infrastructure might be vulnerable to something similar happening?”

Market impact: The incident will not impact natural gas supplies to Europe, as operations at the pipelines were already halted, but benchmark European gas prices rose 12% on Tuesday (Sept. 27) due to market concerns about further sabotage of the remaining flows of Russian gas through Ukraine. Gas prices remain below the all-time highs seen earlier this year. Still, prices are a staggering 200% higher compared to September 2021. James Huckstepp, the head of EMEA gas analytics at S&P Global Platts, told the Financial Times that the leaks will exacerbate energy market uncertainty: “The probability of Nord Stream 1 coming back before the end of the year has essentially dropped from 1% to 0%.”

Eurozone countries have reduced their reliance on Russian gas to less than 10% from about 40% last winter, according to Zongqiang Luo, a senior analyst at Rystad Energy. He added that European countries were two months ahead of schedule in filling their gas storage reserves to above 80% — and, in some cases, above 90%. But there’s also reason to worry If Gazprom follows through on its threat to shut down the third pipeline to Western Europe, businesses and homeowners would feel it. “Whether Europe can survive the winter will be highly dependent upon voluntary gas cuts,” Luo said. Any cuts to business output could leave the economic bloc more vulnerable to recession.

U.S. comments. Speaking at a news conference in Washington, Secretary of State Anthony J. Blinken said Tuesday, “There are initial reports indicating that this may be the result of an attack or some kind of sabotage, but these are initial reports, and we haven’t confirmed that yet… My understanding is the leaks will not have a significant impact on Europe’s energy resilience,” he added.

Russia responds. The Kremlin’s spokesman, Dmitri S. Peskov, said of the leaks that “no possibility can be ruled out,” but the Russian state media sought to blame the U.S. and Ukraine. The state-run RIA Novosti news agency reported that Washington “is an active opponent of Russian gas supplies to Europe,” and said that Ukraine opposed Nord Stream 2 because it “was afraid of losing revenues from the transit of Russian gas.”

— Japan’s resuming of nuclear reactors will aid Europe: IEA chief. International Energy Agency (IEA) chief Fatih Birol said Tuesday that Japan’s restart of nuclear reactors will help ease Europe’s winter supply fears as it will free up more LNG for the global market. Speaking at the International Energy Symposium in Tokyo, Birol said he is “delighted” to see Japan moving toward restarting its nuclear plants, a step announced by the country this summer. “Restarting nuclear plants is good news for Japan, but also a big help for Europe during the winter,” he said, adding: “If Japan restarts [more] nuclear power plants, Japan will import less LNG and more LNG will become available in the market, helping Europe survive for the next few months.” Japanese Prime Minister Fumio Kishida said in July that he plans to bring up to 9 nuclear reactors online this winter to aid in the supply crisis — a step Birol noted on Twitter could free up more than 4 bcm of LNG for global markets.

— All 50 states get green light to build EV charging stations covering 75,000 miles of highways. The U.S. Transportation Department on Tuesday said it approved electric vehicle charging station plans for all 50 states, Washington, D.C., and Puerto Rico covering roughly 75,000 miles of highways. Earlier this year, the Biden administration allocated $5 billion to states to fund EV chargers over five years along interstate highways as part of the bipartisan infrastructure package. States are now approved to build a network of EV charging stations along designated alternative fuel corridors on the national highway system and have access to more than $1.5 billion to help build the chargers.

— Vilsack announces administration is making $500 million in grants available to increase American-made fertilizer production to spur competition and combat price hikes on U.S. farmers caused by the war in Ukraine. Vilsack in an announcement said the Fertilizer Production Expansion Program is an initiative “to bring production and jobs back to the United States, promote competition and support American goods and services.”

As with so many recent USDA announcements, the funds are being made available through the Commodity Credit Corporation (CCC).

Grants will be used to support “independent, innovative and sustainable American fertilizer production to supply American farmers. Funds also will expand the manufacturing and processing of fertilizer and nutrient alternatives in the U.S. and its territories.”

The program will support fertilizer production that is:

• Independent and outside the orbit of dominant fertilizer suppliers. Because the program’s goal is to increase competition, market share restrictions apply.
• Made in America. Products must be produced by companies operating in the U.S. or its territories, to create good-paying jobs at home, and reduce the reliance on potentially unstable, inconsistent foreign supplies.
• Innovative. Techniques will improve fertilizer production methods and efficient-use technologies to jumpstart the next generation of fertilizers and nutrient alternatives.
• Sustainable. Ideally, products will reduce the greenhouse gas impact of transportation, production and use through renewable energy sources, feedstocks and formulations, incentivizing greater precision in fertilizer use.
• Farmer-focused. Like other Commodity Credit Corporation investments, a driving factor is providing support and opportunities for U.S. agricultural commodity producers.

Eligible entities are for-profit businesses and corporations, nonprofit entities, Tribes and Tribal organizations, producer-owned cooperatives and corporations, certified benefit corporations, and state or local governments. Private entities must be independently owned and operated to apply.

• The maximum award is $100 million.
• The minimum award is $1 million.
• The grant term is five years.

USDA will begin accepting applications in the coming days via www.grants.gov. Notably, there will be two opportunities for submission.

USDA plans for a 45-day application window for applicants to receive priority for projects that increase the availability of fertilizer (nitrogen, phosphate or potash) and nutrient alternatives for agricultural producers to use in crop years 2023 or 2024.

USDA will also offer an extended application window, providing an additional 45 days (90-day application window) to receive applications for financial assistance to significantly increase American-made fertilizer production to spur competition and combat price hikes. This extended application window will support applicants who need more time to make additional capacity available.

USDA is hosting two informational webinars:

• Potential applicants and other interested parties are encouraged to attend a webinar on Oct. 4, 2022, to learn more about the program. Pre-registration is required. To register, visit this link.
• Potential applicants and other stakeholders are also encouraged to attend a webinar on Oct. 6, 2022, to learn about application requirements. Pre-registration is required. To register, visit this link.

Potential applicants and stakeholders may e-mail questions to fpep@usda.gov.

For more information, visit www.rd.usda.gov/fpep or www.farmers.gov/global-food-insecurity.

House Ag Chairman David Scott (D-Ga.) applauded the USDA move. “The importance of American-made fertilizer production has never been clearer than it is now. The war in Ukraine and other challenges to our agricultural supply chain have been a hardship for our farmers and impacted access to critical production tools that will carry over into the next harvest season,” said Scott. “In recent months, our House Agriculture Committee has raised the importance of diversifying fertilizer production, recognizing the burden of increased fertilizer costs. The House-passed Lower Food and Fuel Costs Act included investments in the long-term stability and sustainability of the fertilizer industry by supporting more efficient fertilizer use, investing in research and development of innovative fertilizer and fertilizer alternatives, and expanding access to precision agriculture technology,” Scott continued. “However, incentivizing more precise and efficient fertilizer use does not lessen the importance of this critical input for our farmers. We must combine these efforts with investments in domestic production, so our producers do not suffer when forces beyond their control disrupt the fertilizer market. This investment of $500 million in grants from USDA will help spur competition in the domestic fertilizer market and allow our farmers to fight back against rising input costs. I applaud Secretary Vilsack for exercising his discretionary authority to utilize Commodity Credit Corporation funds for such an important effort,” concluded Scott.

— The White House hosts a conference on today to tackle hunger, nutrition and health in America. President Biden is expected to announce increased access to free school meals and incentives for the purchase of fruits and vegetables with food stamps, access to which will be expanded. He also wants to develop a more informative front-of-package labelling scheme like that in Europe. But with the midterms looming, Biden may not have support in Congress for long enough to see these measures through.

— Summary:

• Global Covid-19 cases at 616,207,710 with 6,540,084 deaths.
• U.S. case count is at 96,163,469 with 1,057,273 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 81.48% of the U.S. population.

— Canada move adds to pressure for U.S. to drop travel vaccine rules. The Biden administration earlier this year lifted its requirement for all travelers to test negative for Covid-19 before flying to the U.S., but kept its mandate that foreign nationals need to be vaccinated to enter the country. Canada on Monday said it would remove vaccine, testing, and quarantine requirements for international travelers on Oct. 1. “Ottawa is taking the right step by lifting its vaccine and testing requirement to enter Canada, which will give its economy a substantial boost,” Tori Emerson Barnes, executive vice president of public affairs and policy at the U.S. Travel Association, said in a statement Tuesday. “Washington should follow suit by immediately suspending proof of vaccination for qualified visitors from Canada and other nations.” Truckers and some lawmakers have been pushing for an to end the vaccine requirement for those seeking entry by land at the U.S. borders with Mexico and Canada, arguing that it slows down the movement of goods.

— Two firms developing an experimental Alzheimer’s drug published the results of a large clinical trial which shows it to have slowed down patients’ cognitive decline. Biogen and Eisai announced that their new medicine had reduced the disease’s progression by 27% compared with a placebo. Previous attempts to treat Alzheimer’s with drugs have been beset by high-profile failures.

— Guess who may be a “Democratic” candidate in 2024… feel the Bern? President Joe Biden just may have another challenger for the Democrat nomination in 2024 whether or not he runs for re-election. Sen. Bernie Sanders (I-Vt.), an Independent who caucuses with Senate Democrats, mounted his first presidential campaign as a Democrat in the 2016 general election, ultimately losing the party’s nomination to former Secretary of State Hillary Clinton. He ran again in the 2020 election but ultimately suspended his campaign before the primaries concluded. On Tuesday, during an interview with CBS Mornings, the senator was asked if he planned to run for president in the next election. While Sen Sander left the option open, he noted his primary concern is helping other progressives get elected. “That’s a big — you know, I haven’t made that decision,” Sanders said. The 81-year-old politician also touched his age and the overall concern of aging politicians running for office, “Look, this is what I think. You can’t categorize everybody. You’re different than everybody, you know. We’re all different. We’ve got to look at the individual. But what I think we do, guys, is we look too much at race, at gender, at age. What does somebody stand for? What are their views? Do you agree with them?” Sanders said on CBS. “And obviously you want people who are competent, capable, have the energy — I mean, my god, to be president of the United States requires an enormous amount of energy — but I would say, first of all, take a look at what people stand for. And we don’t do that enough. We’re too much into personality.”

— Democrats now outspending GOP in 13 of 31 close House districts. Democrats have ramped up ad buys in several close House races, outspending Republicans by about $500,000 across 31 key House districts six weeks before the general election, according to AdImpact, which tracks political advertising.

— The House committee investigating the Jan. 6, 2021, Capitol riot postponed its hearing today, citing Hurricane Ian.

— Senate Minority Leader Mitch McConnell signaled support for a bill to overhaul how Congress ratifies electoral votes.

— In major boost to efforts to avoid another Jan. 6 crisis, McConnell endorses bipartisan electoral count reform bill. Senate Minority Leader Mitch McConnell (R-Ky.) joined 22 Republicans and Democrats in backing legislation to prevent future presidents from trying to overturn election results through Congress. The bill, which is likely to get a vote later this year, was prompted by the Jan. 6, 2021, attack on the Capitol by a pro-Trump mob seeking to stop the certification of Joe Biden’s electoral win.

— A new congressional investing bill finally unveiled, but fate murky. House Democratic leaders late yesterday finally unveiled the text of a bill to bar lawmakers, other gov’t officials and their immediate family members from trading in stocks and cryptocurrencies. Officials in all three branches of government, as well as spouses and dependents, would be barred from trading in stocks, futures and commodities, as well as cryptocurrencies and other “digital assets.” Trading in other assets, like mutual funds and ETFs would still be permitted. The legislation covers judges, who have also faced accusations of conflicts of interest in stock trading. Affected individuals must either divest their holdings within 180 days of the bill passing or put them in qualified blind trusts. However, Walter Shaub, a former director of the Office of Government Ethics, questioned the provision for blind trusts and whether they would truly head off conflicts of interest. Outlook for the proposal is uncertain. Despite House Speaker Nancy Pelosi (D-Calif.) has pledged to hold a vote on new investing rules this month, the House doesn’t have much time for that to happen. And some Democrats, including Rep. Steny Hoyer of Maryland, the majority leader, are considered likely to oppose the bill.

— Rep. Henry Cuellar (D-Texas) blasted Biden over the border in comments on Fox News on Tuesday. “Obviously the border is not secure,” Cuellar said. “I have tried and I have tried and I have tried” to get Biden to do more.

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