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September 08, 2024 10:06 AM

The Week Ahead: Sept. 8, 2024

— Kamala Harris faces tight polling as Trump gains slight edge among voters. A fresh New York Times/Siena College poll (link) reveals Donald Trump narrowly leading Kamala Harris, 48% to 47%. The slight shift may indicate Harris’s recent surge is slowing, particularly after a month of favorable coverage following Biden’s exit from the race. Despite potential vulnerabilities, Trump is perceived as the change candidate by a majority of voters, while Harris struggles to define herself amid ongoing political uncertainties. Link to more via the New York Times.

Of note: A near majority of voters say Trump is “not too far” to the left or right on the issues, while only around one-third say he’s “too far to the right.” Nearly half of voters, in contrast, say Harris is too far to the left; only 41 percent say she’s “not too far either way.” Also, Democrats had a slight edge in enthusiasm in the latest survey, with 91% saying they were enthusiastic about voting versus 85% of Republicans.

— Tuesday’s presidential debate could be key for some voters in tight 2024 race. As Donald Trump prepares to face Kamala Harris in the Philadelphia debate, he struggles to adapt to her candidacy after Joe Biden ended his own. Key challenges for Trump include managing his rhetoric on race and gender, staying focused on policy issues, and demonstrating coherence. Harris seeks to introduce herself to undecided voters, navigate Trump’s personal attacks, and define her policy positions while connecting with the Biden legacy. Both candidates face high stakes as the debate could shape perceptions in the close 2024 race.

Of note:

• Trump struggles to shift from grievances to policy, often veering off course in public appearances. Some say Trump’s debate challenge is himself.
• Harris enters the debate with momentum but needs to prove herself to voters and avoid being defined by Trump.
• Trump’s ability to manage attacks on Harris’s race and gender will be scrutinized.
• Both candidates face intense pressure, with the debate’s outcome potentially shaping the rest of the campaign.

Nate Silver writes (link): “And the fact is that if you’d asked me a few weeks ago where I thought the polls would be today, I’d have thought Harris would be polling better than she is — say, a 4- or 5-point lead in national polls and 2 or 3 points in Pennsylvania. You’re welcome to debate the precise mechanics the model uses, but directionally, it’s hard to escape the conclusion that she’ll need the debate not just to hold serve but to regain momentum.”

— “Kama Kameleon”: Axios notes that “with 60 days left in the race, and at the very moment she’s presenting a different ideology than four years ago, Vice President Kamala Harris isn’t getting subjected to the media scrutiny typical for a presidential nominee.” Axios points to nine unexplained apparent policy shifts:

— Trump vows 100% tariffs on nations moving away from U.S. dollar. At a Wisconsin rally, Donald Trump pledged to impose 100% tariffs on countries abandoning the U.S. dollar for trade, reinforcing his protectionist platform. Trump argued the dollar has been “under siege” for years and aims to prevent nations from shifting to other currencies. This move is part of his broader economic strategy. China, India, Brazil, Russia and South Africa discussed de-dollarization at a summit last year. The BRICS nations have been actively promoting the use of national currencies in trade and transactions.

Trump’s economic advisers have been considering ways to actively counter moves by key emerging markets to reduce their exposure to the U.S. dollar.

Potential measures being discussed include imposing sanctions on both allies and adversaries who pursue bilateral trade using currencies other than the dollar.

Other proposed methods include export controls, accusations of currency manipulation, and tariffs.

• The dollar is used in 54% of foreign trade invoices globally as of 2022.
• It makes up 58% of international payments (excluding payments within the Eurozone).
• About 64% of world debt is denominated in dollars.
• The dollar comprises about 59% of global foreign currency reserves held by central banks.
• The dollar represents 88% of foreign exchange transactions worldwide.
• The dollar’s share of global foreign exchange reserves has declined from 71% in 2001 to 54.8% in Q1 2024. This decline has not benefited other major currencies like the euro, pound, or yen, but rather smaller “nontraditional” reserve currencies.
• If gold is included in reserve asset portfolios, the dollar’s share drops further to 48.2% of total global reserves.

Bottom line: Despite the gradual decline, the dollar remains the pre-eminent reserve currency and its role as the primary global reserve currency is secure in the near and medium term. However, some countries are signaling intentions to diversify away from dollars, particularly considering recent geopolitical events and sanctions.

— You may have heard this before but… A new proposal to strike a cease-fire deal between Israel and Hamas was supposed to be presented, CIA Director William Burns said Saturday. The Biden administration, especially Secretary of State Anthony Blinken, has lost a lot of credibility on this issue after more than a few signals that a cease fire was near.

Update: The Biden/Harris push for a cease fire was upended again, putting the deal on life support as U.S. officials say they have indefinitely postponed their plan to present the two sides with a “take it or leave it” proposal. A last-minute demand by Hamas regarding prisoner releases has complicated nine months of negotiations involving the U.S., Qatar, and Egypt. Despite earlier optimism that a deal was close, the talks have repeatedly been delayed as Israel and Hamas introduce new conditions, frustrating U.S. officials and President Biden, who have been heavily invested in the process. Each new demand has set negotiations back by weeks or even months.

U.S. officials remain hopeful that some of the seven American hostages in Gaza are alive and could be released as part of a three-phase agreement. Despite the “take it or leave it” nature of the current offer, the Biden administration is committed to pursuing negotiations as long as there’s a chance for success.

— U.S. dockworkers poised for potential strike as contract deadline looms. Dockworkers along the U.S. East Coast and Gulf Coast are preparing for a strike on Oct. 1, as negotiations with port employers stall just weeks before their labor contract expires. The International Longshoremen’s Association (ILA) demands a 77% pay increase, far exceeding the 32% gains achieved by West Coast dockworkers last year. Without a new agreement by Sept. 30, expiration of the current six-year agreement, key American ports could face an indefinite closure, threatening the U.S. economy during a critical period before the presidential election Nov. 5. Shippers continue to move cargo ahead of potential disruption. Ports in Long Beach, California, and Los Angeles have seen an uptick in cargo volumes processed, with the ports citing those strike concerns as a driver of early cargo movements, along with tariff concerns and peak season activity. Several organizations, including the Agriculture Transportation Coalition, Cotton Growers Warehouse Association and International Dairy Foods Association, jointly sent a letter in June to President Joe Biden to “immediately work with both parties to resume contract negotiations and ensure there is no disruption to port operations and cargo fluidity.”

— Egg prices surge amid ongoing bird flu outbreak and rising demand. Egg prices are climbing again, driven by a bird flu outbreak that has decimated U.S. poultry flocks and heightened consumer demand. Wholesale egg prices have surpassed $3 per dozen, with retail prices up 19% compared to last year. Strong domestic sales and increased exports have further strained supply, while the upcoming holiday baking season is expected to add additional pressure. Despite improvements in managing outbreaks, recovering from bird flu losses remains a slow process for egg producers.

— First U.S. bird flu case with no known animal exposure confirmed in Missouri. A Missouri resident has been confirmed as the first case of bird flu with no known exposure to sick animals, according to the CDC. The individual, who was hospitalized and has since recovered, had no work-related contact with animals. The infection was identified through routine flu surveillance, rather than the targeted H5N1 program typically used for farm workers. This marks a shift in how the virus is being monitored and may indicate new patterns of transmission.

— Divided government may boost markets amid 2024 election uncertainty. Investment strategist Ed Yardeni in remarks to the Investor’s Business Daily (link) suggests that stock markets prefer a divided government, which historically produces stronger returns. Yardeni warns that a clean sweep by either Democrats or Republicans in the 2024 election could worsen inflation by expanding deficits. As the 2017 Trump tax cuts are set to expire in 2025, their extension could increase the budget deficit, raising bond yields and pressuring stock prices. Yardeni believes markets are betting on gridlock to avoid further economic instability.

— Remnants of political machines persist in parts of the U.S. While traditional political machines have largely declined, remnants and modern adaptations continue to influence politics in some states and cities:

• New Jersey: The Democratic machines, especially in South Jersey, have weakened due to the indictment of George Norcross and a federal ruling against the “county line” ballot design.
• Illinois: The Cook County Democratic Party still holds significant power in Chicago, with modern financing and patronage systems reflecting aspects of machine politics.
• New York: The Queens and Brooklyn Democratic Party organizations maintain strong local influence, with some seeing political consultancies as modern versions of machines.
• Pennsylvania: Philadelphia’s Democratic City Committee remains influential, though less so than in the past.
• Rhode Island & Maryland: Elements of machine politics persist in certain cities and towns, though their influence has declined.

Of note: These modern forms of machine-like structures rely more on campaign financing and party control than on historical methods of patronage and corruption.

WASHINGTON FOCUS

Congress returns Sept. 9 but not much is expected until a post-election lame-duck session of Congress. Key issues include:

• FY 2025 spending: It’s that time for discussing whether Republicans will shut down the government over House GOP conservatives’ push for controversial riders on a must-have spending bill as fiscal year (FY) 2025 begins Oct. 1. If the House were to succeed in getting poison-pill language in its continuing resolution (CR), it would go nowhere in the Senate. It’s like watching a Kansas City Chiefs football game: we all know how it will end, but in this case, substitute lawmakers’ mouths instead of the big toe in the KC game.

What’s new: House Republicans on Friday introduced a stopgap bill extending government funding into March 2024, including a controversial measure to purge noncitizens from voter rolls. The bill, scheduled for review this week, faces strong opposition from Democrats and as noted is unlikely to pass in the Senate. Speaker Mike Johnson (R-La.) promotes the bill as a step toward both funding the government and securing elections, but Democratic leaders warn that this partisan approach increases the risk of a government shutdown before the Sept. 30 deadline.

Of note: The House has only passed 5 of 12 required appropriations bills, while the Senate has passed none. A short-term spending bill to keep the government funded through the November elections is a given.

Bottom line: A shutdown seems unlikely at this point unless Johnson declines to put a “clean” bill on the floor later this month, assuming the Senate sends one back.

• House consideration of a new farm bill? Remember months ago, when House Ag Chair G.T. Thompson (R-Pa.) said to “wait until September” to see whether House Speaker Johnson would call for a House floor vote on a new farm bill? Waiting… waiting. And to be fair, what about the Senate? Senate Ag Chair Debbie Stabenow (D-Mich.) still has not released text of her Senate farm bill alternative. Why? Hard to negotiate without actual text and a Congressional Budget Office (CBO) score.

Farm-state lawmakers not pushing for a farm bill vote this year should be asked about USDA’s latest update on farm income which shows direct payments to farmers (in apples-to-applies inflation-adjusted terms) is at the lowest level since 1982. Is Congress asleep at the wheel? Also, several ag sector groups are in Washington this week to lobby for a new farm bill.

What’s new: The White House sought an extension of the 2018 Farm Bill as part of the stopgap bill. But the House GOP bill unveiled Friday night says nothing about the farm bill.

Bottom line: The expiration of current milk price supports at the end of the year could lead to a “dairy cliff,” causing milk prices to spike for consumers and increasing government costs. If no new farm bill is passed, USDA would be required to purchase large quantities of milk at double the current prices, driving up demand. While there is some flexibility, last year’s farm bill extension wasn’t enacted until November. This will likely be a matter for the lame-duck session of Congress after Nov. 5 elections.

• Johnson’s strategy: Johnson has been actively campaigning and fundraising for GOP candidates, raising $2 million in August alone. He’s pitching his vision for House Republicans next year, focusing on deregulation and business-friendly tax legislation. The speaker is attempting to appease fiscal conservatives by proposing a longer-term stopgap measure and attaching the SAVE Act, which aims to prevent non-citizens from voting. However, this approach faces opposition from Democrats.

Bottom line: With a slim Republican majority, Johnson must balance appeasing fiscal conservatives and addressing broader party concerns ahead of the 2024 election. As Johnson prepares for another term as speaker, he faces skepticism from some Republicans and pressure to maintain party control, all while dealing with ongoing intraparty conflicts. His ability to retain the speakership may depend on the outcome of the November elections and potentially Donald Trump’s support.

— The House will consider the Protecting America’s Agricultural Land from Foreign Harm Act this week, which aims to restrict foreign ownership of U.S. farmland.

Main provisions: The bill would prohibit individuals and companies associated with the governments of Iran, North Korea, China, or Russia from purchasing or leasing U.S. agricultural land. It would not require current foreign landowners to divest their holdings, but would bar those associated with the specified governments from participating in USDA programs.

Background: Foreign ownership of U.S. farmland has been a growing concern, with foreign investors holding interests in over 43.4 million acres as of 2022. While China is often the focus of political rhetoric, Chinese entities actually own less than 1% of foreign-held farmland in the U.S. Canadian citizens and companies own the largest share of foreign-held U.S. agricultural land.

Proponents argue the bill is necessary to protect national security and food security interests. The legislation has bipartisan support, with both Republican and Democratic cosponsors.

This bill is part of a larger trend, with at least 21 states considering similar legislation to restrict foreign ownership of farmland in 2024. Several Midwest states have recently moved to block or restrict foreign ownership of agricultural land.

Critics point out that current data on foreign land ownership may be flawed or incomplete due to self-reporting requirements and enforcement issues. There are concerns about the potential economic impacts of such restrictions on the agricultural sector.

— Other congressional issues:

• Immigration and Ukraine aid: Negotiations continue over immigration restrictions and additional aid to Ukraine. Senate Republicans are demanding tougher immigration laws in exchange for supporting more Ukraine funding. Even if the Senate reaches a deal, passage in the House is uncertain.

• Impeachment inquiry: House Republicans will have to decide whether to move forward with impeaching President Biden, despite lacking direct evidence of impeachable offenses. The inquiry’s fate may depend on vulnerable GOP lawmakers in Biden-won districts.

• Debt ceiling: While not an immediate deadline, Congress must raise the debt ceiling by Jan. 2, 2025, to avoid the government defaulting on its financial obligations.

Congress faces pressure to address these issues amid a divided government and looming elections, making compromise challenging on many fronts.

OTHER EVENTS

— Monday, Sept. 9
• National Pork Producers Council (NPPC) officers and CEO hold a virtual media briefing about the industry’s current policy priorities. NPPC speakers will discuss the state of the industry and answer questions on a range of topics, including:
— 2024 Farm Bill
— International Trade
— Agriculture Labor
— Federal solution to California Proposition 12
• Agriculture platforms of presidential candidates. The Farm Foundation holds a discussion on “The Agricultural Platforms of the Candidates for President of the United States.”

— Tuesday, Sept. 10
• United Nations. 79th session of the UN General Assembly opens in New York.
• Presidential debate. Vice President Kamala Harris and former President Donald Trump will square off in a presidential debate in Philadelphia. The rules for the event, hosted by ABC News, will largely mirror the terms used by CNN for its June 27 debate, including that microphones will be muted as the other candidate speaks and no studio audience will be present, according to the network, noting that both candidates had agreed to the format.
• Evaluating FDA Human Foods and tobacco programs. House Energy and Commerce subcommittee hearing. Key witnesses include: James “Jim” Jones, Deputy Commissioner for Human Foods, FDA; Dr. Brian King, Director, Center for Tobacco Products, FDA.

— USDA will hold two webinars this week to share science behind the Salmonella Framework for Raw Poultry Products proposed rule that was put forth by the agency Aug. 7. Those participating can ask clarifying questions or technical questions about the information provided in the webinar but there is no opportunity for public comments during the sessions. The sessions will take place Sept. 9 and 10.

Of note: Wisconsin health officials initiated a recall of eggs following an outbreak of salmonella infections among 65 people in nine states that originated on a Wisconsin farm. The Wisconsin Department of Health Services said in a statement Friday that among those infected by salmonella are 42 people in Wisconsin, where the eggs are believed to have been sold. “The eggs were distributed in Wisconsin, Illinois and Michigan through retail stores and food service distributors,” the department said. “The recall includes all egg types such as conventional cage-free, organic, and non-GMO, carton sizes, and expiration dates in containers labeled with ‘Milo’s Poultry Farms’ or ‘Tony’s Fresh Market.’” The CDC estimates salmonella causes 1.35 million infections annually, most through food, and about 420 deaths. USDA estimates there are 125,000 infections from chicken and 43,000 from turkey each year.

— Wednesday, Sept. 11
• It has been 23 years since the terror attacks on the World Trade Center, the Pentagon and Flight 93 over Shanksville, Pennsylvania.
• Fall legislative agenda, including a new farm bill. CQ Roll Call and FiscalNote hold a virtual discussion on “Fall 2024 Legislative Preview: Congress Crunch Time” about legislative priorities and key bills Congress aims to address before the end of the fiscal year, including critical appropriations, the National Defense Authorization Act (NDAA) and the farm bill.
• Tribal, elderly food distribution shortages. House Ag Nutrition, Foreign Agriculture, and Horticulture Subcommittee and House Appropriations Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Subcommittee joint hearing on “Severe Food Distribution Shortages in Tribal and Elderly Communities.”
• WOTUS ruling impacts. House Transportation and Infrastructure Water Resources and Environment Subcommittee hearing on “Waters of the United States Implementation Post-Sackett Decision: Experiences and Perspective.”
• Trade issues. Peterson Institute for International Economics virtual discussion on “Why do Politicians Lie About Trade, and What Can We Do About It?”

— Thursday, Sept. 12\
• Farm financial conditions. Farm Credit Administration meeting of the quarterly report on economic conditions and Farm Credit System condition and performance.
• Tax policy. Senate Finance Committee hearing on “The 2025 Tax Policy Debate and Tax Avoidance Strategies.”

ECONOMIC REPORTS & EVENTS

U.S. inflation data for August out this week (CPI on Wednesday and PPI on Thursday) is expected to play a key role in guiding the Federal Reserve’s decision to cut interest rates at its Sept. 17-18 FOMC meeting. Investors anticipate a significant decline in headline inflation, raising the possibility of a 50 basis-point cut if the economy slows. Global markets are also watching China’s economic moves amid trade tensions and Japan’s second-quarter growth, while the European Central Bank is expected to announce a rate reduction on Thursday.

Monday, Sept. 9
• Wholesale Inventories
• Vehicle sales
• Consumer credit
• China PPI, CPI for August

Tuesday, Sept. 10
• NFIB optimism index

Wednesday, Sept. 11
• MBA Mortgage Applications
• Consumer Price Index

Thursday, Sept. 12
• Jobless claims
• Producer Price Index
• Monthly U.S. Budget Statement
• Fed Balance Sheet
• Money Supply
• European Central Bank is expected to cut interest rates
• ECB President Christine Lagarde addresses journalists

Friday, Sept. 13
• Import and Export Prices
• Consumer Sentiment

KEY USDA & INTERNATIONAL AG & ENERGY REPORTS & EVENTS

USDA’s monthly reports (WASDE/Crop Production) come Thursday.

Three major oil forecasters — OPEC, the EIA and the IEA — will publish their monthly market outlooks during the week.

Monday, Sept. 9

Ag reports and events:

Export Inspections
Crop Progress
StatsCanada stockpile data for wheat, barley and canola
Unica cane crush, sugar production (tentative)