Last-Minute Drama for Continuing Resolution: Here We Go Again

Friday brings key economic and ag sector reports

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September 25, 2022 04:58 PM

Friday brings key economic and ag sector reports

Key econ & ag reports

Friday brings important financial and ag sector reports.
The Fed’s preferred inflation gauge is expected to show prices still rising at an uncomfortably rapid pace.
USDA on Friday releases Grain Stocks and Small Grains Summary (final 2022-crop wheat estimates), which, Pro Farmer says, “could add to near-term price volatility.”

CR drama as usual

This time it is some Democrats opposed to some potential language in the must-pass continuing resolution (CR) to provide stopgap gov’t spending for fiscal year 2023, which begins Oct. 1. That means Congress has until Friday to get agreement. Expect the usual up-and-down pattern on this topic, with lawmakers eventually avoiding a gov’t shutdown.

Ag and food events

Another week, another farm bill hearing. But the key on farm bill matters is who controls the chamber following Nov. 8 elections.
The White House Conference on Hunger, Nutrition and Health comes Wednesday, with a slew of speakers including President Joe Biden and USDA Secretary Tom Vilsack. Last time the White House hosted a conference focused on food insecurity was more than 50 years ago under the Nixon administration.

Russia & China

What would a week be without OMG issues involving Russia (nuclear threat, annexation, Ukraine grain exports, etc.). We have updates.
As for China, we have a bottom-line quote from China-watcher Bill Bishop on the apparently false rumor of a Xi coup. In brief, he says the rumor is BS. How about that for smart brevity?

Washington Focus

Congress is in recess Monday for the Rosh Hashana holiday.

Continuing resolution (CR). Congress has until Friday to pass a CR to keep the government operating after the new fiscal year begins on Saturday Oct. 1. Senate Majority Leader Chuck Schumer (D-N.Y. set the stopgap spending measure in motion for consideration this week. The House is ready to move straight to the stopgap under “same-day rule” authority once it comes over from the Senate, House Speaker Nancy Pelosi (D-Calif.) said Thursday. Pelosi said the current plan is for the Senate to vote on cloture Tuesday night “after sundown,” following the Rosh Hashana holiday.

Permission for permitting? Senate Democrats plan to attach energy infrastructure permit streamlining legislation by sometimes-centrist Sen. Joe Manchin (D-W.Va.), which got a boost when Manchin’s home-state colleague, Republican Sen. Shelley Moore Capito, endorsed it. But some Democrats are not so sure about the legislation — or at least to its inclusion in the spending bill or other must-pass legislation. Sen. Jeff Merkley (D-Ore.), with six other Democrats and independent Bernie Sanders, expressed opposition to including permitting legislation in a CR and wrote in a letter the legislation should be considered through committee and floor debate “separate from the urgent need to see that the government stays open.”

Hitching a ride on the CR: FDA user fee bill. Senate committee leaders struck an agreement to reauthorize five-year user fee deals for the Food and Drug Administration (FDA). That ensures the agency can pay staff in charge of product reviews and approvals for prescription drugs, biologics and medical devices. But some of the details are still being negotiated.

More aid for Ukraine will also be in the CR. Since Russia invaded Ukraine on Feb. 24, the U.S. has provided $15.8 billion for security assistance, including a military package of $600 million earlier this month. Another $13.7 billion for security and economic assistance is included in the tentative stopgap funding bill.

Bottom line: You will hear lots of chatter about a possible gov’t shutdown… this time led by disgruntled progressive Democrats. But you are better off watching sports, except the Washington Nationals. But you can watch all the teams with past Nationals players… just saying.

The House votes this week on a reauthorization of the Global Food Security Act (link), including funding authorization for the Feed the Future program (link) that helps develop agriculture and food systems in low-income countries. The measure will reauthorize Feed the Future through fiscal 2028. The bill also increases the funding level for the U.S. Agency for International Development’s Emergency Food Security Program to $3.9 billion a year, starting in fiscal year (FY) 2024. The fund, currently authorized at $2.8 billion annually, provides cash assistance and vouchers to address crises around the world.

Nominations. The Senate Ag Committee will vote Tuesday on three nominees, including Oregon Agriculture Director Alexis Taylor to be undersecretary for trade and foreign agricultural affairs. Other nominees: Jose Emilio Esteban of USDA’s Food Safety and Inspection Service to be undersecretary for food safety, and Vincent Garfield Logan, nominated to be a board member for the Farm Credit Administration, the oversight agency for the Farm Credit System. No word yet on Senate floor votes.

Senate action is not yet scheduled on the nomination of USDA adviser Doug McKalip to be the chief agricultural trade negotiator in the Office of the U.S. Trade Representative.

Counting presidential electoral votes. A markup on Tuesday of a bipartisan bill (S 4573) would revamp the 1887 law governing the counting of presidential electoral votes and clarify what happens during presidential transitions. It is being led by Sen. Amy Klobuchar, (D-Minn.) the Senate Rules and Administration Committee chair. The House passed its version (HR 8873) on Sept. 21, with nine Republicans voting in favor, all of whom either lost their primaries or have announced they will retire at the end of this Congress.

The 6th annual, five-day National Clean Energy Week kicks off in Washington, D.C. Link for details.

Another House Ag Committee farm bill hearing on Thursday with the focus on Title XII – Department Operations and Outreach.

The House Select Committee on the Climate Crisis will hold a hearing, “A Big Climate Deal: Lowering Costs, Creating Jobs, and Reducing Pollution with the Inflation Reduction Act” Thursday at 1:30 p.m. ET.

Meanwhile, Rep. Liz Cheney (R-Wyo.) told Texas Tribune CEO Evan Smith she’d do “whatever it takes” to make sure former President Trump isn’t the GOP nominee in 2024 — including campaigning for Democrats. "[I]f he is the nominee, I won’t be a Republican.” Link for details.

The House select committee investigating the January 6, 2021, riot at the U.S. Capitol will hold another hearing Wednesday at 1 p.m. ET. Rep. Bennie Thompson (D-Miss.), chairman of the panel, said it will be the last hearing until the committee releases its final report, which is expected by the end of the year — but a summary is expected to be released prior to Nov. 8 elections.

Office of the U.S. Trade Representative (USTR) official on Wednesday will address agriculture departments nationwide. Deputy Assistant USTR for Agricultural Affairs Leslie Yang will provide perspective on administration trade priorities and issues important to the agriculture and food industry during the National Association of State Departments of Agriculture (NASDA) annual meeting on Sept. 26-29.

President Joe Biden will deliver remarks Wednesday at the White House Conference on Hunger, Nutrition and Health, which will be held at the Ronald Reagan Building and International Trade Center. The conference will discuss policies to end U.S. hunger and diet-related diseases by 2030. “Too many families don’t know where they’re going to get their next meal,” Biden said in a video announcing the conference. “Too many empty chairs around the kitchen table because a loved one was taken by heart disease, diabetes or other diet-oriented diseases, which are some of the leading causes of death in our country.” Link for more.

The last time the White House hosted a conference focused on food insecurity was more than 50 years ago, when President Richard Nixon hosted the White House Conference on Food, Nutrition and Health in 1969. That confab led to expansions of the food stamp program and the school lunch program, creation of the Special Supplemental Nutrition Program for Women, Infants and Children, and improved nutrition labeling.

Millions of dollars to host the event. Rep. James McGovern (D-Mass.), chairman of the House Rules Committee, led an effort to get the White House to host the conference and pushed for $2.5 million to be allocated in a government funding package to host the event.

Your next meal. Biden’s domestic policy adviser, Susan Rice, said in a statement that “no one should have to wonder where their next meal will come from.”

Conference speakers include President Joe Biden, White House Domestic Policy Adviser Susan Rice, USDA Secretary Tom Vilsack, Health and Human Services Secretary Xavier Becerra and Chef Jose Andres.

The International Fresh Produce Association holds its annual Washington conference, Monday through Wednesday. Link for speakers.

Securities and Exchange Commission Chair Gary Gensler makes two appearances on Wednesday: Gensler joins the MIT AI Policy Forum for a virtual fireside chat at 12:15 p.m. ET, and speaks again via video at 1:20 p.m. ET for the Investment Adviser Association’s 2022 Policy & Leadership Forum.

Jared Bernstein, member of the White House Council of Economic Advisers, will discuss the U.S. economy in a Peterson Institute for International Economics virtual event on Wednesday at 1 p.m. ET.

Brian Deese, director of the National Economic Council, will speak at an Economic Club of Washington, D.C. dinner on Tuesday at 7 p.m. ET.

Regarding Putin’s war on Ukraine, the Kremlin may complete the annexation of the four occupied regions of Ukraine as soon as this week, just days after what the United Nations denounced as illegal votes to join Russia. President Vladimir Putin may make his annual address to parliament Friday, a state news agency reported, days after the so-called referendums are due to end.

Background. Seven months after a full-scale invasion of Ukraine, Russia is attempting to annex some of its neighbor’s most productive farmland and industrial areas. Putin ordered another 300,000 troops conscripted into Russia’s “special military operation.”

White House national security adviser Jake Sullivan on Sunday said the U.S. will “respond decisively” if Russian President Vladimir Putin moves to use nuclear weapons. “We have communicated directly, privately, at very high levels, to the Kremlin that any use of nuclear weapons will be met with catastrophic consequences for Russia, that the United States and our allies will respond decisively. And we have been clear and specific about what that will entail,” Sullivan told CBS Face the Nation host Margaret Brennan. Sullivan said the U.S. has had private, high-level talks with leaders in Moscow about the threat, explaining the Biden administration is trying to prevent a “rhetorical tit for tat” between the two countries. Ukrainian President Volodymyr Zelenskyy on Sunday said Putin might not be bluffing in his latest threats of using nuclear weapons. But intelligence sources disagree, saying it was Putin’s way to put pressure on Europe and the U.S. to back away from aiding Ukraine. Meanwhile, Britain’s new prime minister, Liz Truss, on Sunday said Putin’s recent moves indicate a reaction to Moscow losing ground in the ongoing conflict in Ukraine.

Meanwhile, eight ships carrying a total of 131,300 tons of agricultural products to Africa, Asia and Europe were set to leave the ports of Odesa and Chornomorsk on Saturday, Ukraine’s Infrastructure Ministry said on Facebook. Six ships sailed early in the morning and formed a caravan, with two more were on the way. Since the safe-transit agreement brokered by Turkey and the U.N. was reached between Ukraine and Russia in late July, 221 ships have left Ukraine’s ports on the Black Sea with 4.7 million tons of agriculture products, chiefly grains.

If you read or heard about a possible Xi Jinping coup… this from China-watcher Bill Bishop:

“The rumor frenzy over the last 48 hours has gotten out of control. For those who have not heard the rumors, Xi has been supposedly removed in a coup. It’s CPC elite politics so never say never but I think this round of rumors is BS. The rumor was originally hyped by an account with a track record of making bogus claims, and in the frenzied amplification no one has presented any credible sourcing or evidence, just lots of wishful thinking.”

Economic Reports for the Week

Focus will be on a myriad of speeches by Fed officials (details below) and the release Friday of the PCE price index and personal income and spending. The Fed’s preferred inflation gauge is expected to show that prices are still rising at an uncomfortably rapid pace. Economists estimate that August’s headline personal-consumption expenditures price index cooled only slightly from July’s 6.3% annual pace as gasoline prices tumbled. Core inflation, which excludes volatile food and energy components, is forecast to have picked up from the prior month’s 4.6% amid persistent price gains for shelter and some in-person services. If those estimates hold, the report will underscore strong and stubborn inflation pressures. Other reports include the latest updates on durable orders, consumer confidence, new home sales and GDP.

Monday, Sept. 26

Federal Reserve Bank of Chicago releases its National Activity Index for August. Consensus estimate is for a 0.32 reading, slightly more than July’s 0.27 figure. Prior to the July data, the index had two months of negative readings, which indicates that the economy is growing at a slower rate than the historical average.
Federal Reserve speakers: Boston Federal Reserve Bank President Susan Collins at Boston chamber of commerce; President of the Federal Reserve Bank of Atlanta Raphael Bostic on income and wealth inequality; Dallas Fed President Lorie Logan: participates in Q&A session; Cleveland Federal Reserve President Loretta Mester on the economic outlook at MIT event.
OECD publishes its forecast of the near-term prospects for the global economy in its interim economic outlook.

Tuesday, Sept. 27

Census Bureau reports new home sales data for August. Sales of new single-family homes are expected to decline by roughly 20,000 from July to a seasonally adjusted annual rate of 492,000.
Census Bureau releases the durable goods report for August. Economists forecast that new orders for durable manufactured goods will remain flat month over month at $273.5 billion. Excluding transportation, new orders are seen rising 0.2% matching the July gain.
Conference Board releases its Consumer Confidence Index for September. Expectations are for a 104 reading, slightly higher than in August. The index has rebounded from this year’s low in July but is well off its recent peak from last summer.
S&P CoreLogic releases its Case-Shiller National Home Price Index for July. The consensus call is for a 17% year-over-over jump compared with an 18% increase in June. While the index has seen a deceleration in the growth rate, home prices are still rising at a robust clip. This past week Federal Reserve Chairman Jerome Powell said that the housing market probably needs to go through a “correction” and that property prices “were going up at an unsustainably fast level.”
WSJ’s Nick Timiraos, former Treasury Secretary Lawrence Summers and Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, at 1 p.m. ET, will discuss the Fed’s September policy meeting and its plan to battle high inflation.
Federal Reserve speakers: Chicago Federal Reserve Bank President Charles Evans on the economic outlook and monetary policy; Fed Chairman Jerome Powell discusses digital currencies; Bullard: on economic outlook and monetary policy; President and CEO of Federal Reserve Bank of San Francisco Mary Daly takes part in virtual Q&A session.

Wednesday, Sept. 28

MBA Mortgage Applications
International Trade
Retail Inventories
Wholesale Inventories
Pending Home Sales
Federal Reserve speakers: Bostic on leadership in banking; Federal Reserve Bank of St. Louis President James Bullard delivers welcoming remarks at St. Louis Fed event; Evans speaks at London School of Economics; Kansas City Fed President Esther George will give opening remarks for the Kansas City Fed’s “Minorities in Banking” conference; Fed Governor Michelle Bowman will give a speech at the St. Louis banking conference.

Thursday, Sept. 29

Jobless Claims
GDP
Fed Balance Sheet
Money Supply
Federal Reserve speakers: Bullard participates in virtual forum on emerging markets; Mester takes part in panel at event on inflation; Daly: at Boise State University.

Friday, Sept. 30

Bureau of Economic Analysis reports personal income and expenditures for August. Income is expected to increase 0.3% month over month while spending is seen rising 0.2%. This compares with gains of 0.2% and 0.1%, respectively, in July.
PCE. Economists forecast that the Fed’s favored inflation gauge, the core personal consumption expenditures (PCE) price index, will rise 4.8% year over year after a 4.6% increase in July.
Chicago PMI
Univ. of Michigan Consumer Sentiment
Federal Reserve speakers: Lael Brainard, Vice Chair of the Board of Governors of the Federal Reserve System: delivers opening remarks at New York Fed conference; Federal Reserve Bank of New York President John Williams delivers closing remarks at New York Fed conference; Bowman will discuss large bank supervision at the Institute of International Finance.

Key USDA & international Ag & Energy Reports and Events

Key USDA reports come Friday (Sept. 30), with Pro Farmer noting: “USDA’s Grain Stocks and Small Grains Summary (final 2022-crop wheat estimates) could add to near-term price volatility.”

Monday, Sept. 26

Ag reports and events:

Export Inspections
Crop Progress
Peanut Stocks and Processing
Malaysia’s Sept. 1-25 palm oil export data
Holiday: New Zealand