Over $3 Bil. Available Via ERP for 2022 Natural Disasters for Row & Specialty Crop Growers

Farm bill in 2025? Latest Univ. of Mo./Farm Journal survey results | GM, UAW reach accord

Jim Wiesemeyer

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October 30, 2023 08:57 AM

Farm bill in 2025? Latest Univ. of Mo./Farm Journal survey results | GM, UAW reach accord

Today’s Digital Newspaper

MARKET FOCUS

GM and UAW reportedly reach tentative agreement: Reuters
McDonald’s Q3 earnings beat expectations thanks to price hikes, U.S. sales rise
Big increase in U.S. Treasury yields could potentially bring end Fed rate hikes
Malanga: Potential for SPX rally amid oversold conditions and upcoming events
Germany’s economy experienced a slight contraction of 0.1% in third quarter
Traders increasingly willing to do business with Russian metals
Ag markets today
Grain trader and analyst Richard Crow sizes up commodity markets
St. Lawrence Seaway expected to reopen today after tentative deal reached
Record high U.S. soy meal exports anticipated amid growing demand for green diesel
Ag trade update
NWS weather outlook
Pro Farmer First Thing Today items

CONGRESS

Senate returns to work on a spending bill minibus and install an ambassador to Israel
Aid to Israel and Ukraine topic of Senate hearing Tuesday
GOP split on aid to Israel and Ukraine

ISRAEL/HAMAS CONFLICT

Israel enters ‘second stage’ of its war against Hamas

RUSSIA & UKRAINE

Ukraine’s grain exports fall sharply
Russia proposes slightly bigger fertilizer export quota

POLICY

Healthy U.S. ag economy one reason it could be 2025 before new farm bill: Survey
2022 ERP finally announced

CHINA

U.S. set to increase number of weekly flights between U.S. and China from 48 to 70
Hong Kong, facing exodus, offers money for babies

TRADE POLICY

G7 calls for immediate repeal of bans on Japanese food, pressing China

ENERGY & CLIMATE CHANGE

German leaders worry that Chinese manufacturers will take over wind manufacturing

LIVESTOCK, NUTRITION & FOOD INDUSTRY

Soaring cocoa prices haunt candy costs, leading to Halloween budget revisions
HPAI cases surge in U.S. turkey farms, posing endemic threat

POLITICS & ELECTIONS

Biden’s challenge: Engaging less-active voters

OTHER ITEMS OF NOTE

Biden set to sign a far-reaching executive order on artificial intelligence (AI) today

MARKET FOCUS

— Equities today: Asian and European stocks were mixed overnight. U.S. Dow opened up around 240 points. In Asia, Japan -1%. Hong Kong flat. China +0.1%. India +0.5%. In Europe, at midday, London +0.8%. Paris +0.8%. Frankfurt +0.6%.

U.S. equities for the week: All three major indices registered losses for the week with the S&P 500 joining the Nasdaq in contraction territory. For the week, the Dow was down 2.1%, the Nasdaq declined 2.6% and the S&P 500 fell 2.5%.

On Friday, the Dow fell 366.71 points, 1.12%, at 32,417.59. The Nasdaq moved up 47.41 points, 0.38%, at 12,543.01. The S&P 500 was down 19.86 points, 0.48%, at 4,117.37. The benchmark gauge’s slide pushed it into correction territory, with Friday’s closing price marking a more-than-10% drop from the S&P’s 52-week closing high of 4,588.96 points notched on July 31. That comes just two days after the Nasdaq also entered correction territory.

— McDonald’s Q3 earnings beat expectations thanks to price hikes, U.S. sales rise. In its latest earnings report, McDonald’s exceeded analysts’ expectations, driven by price increases that boosted U.S. sales. The fast-food giant reported adjusted earnings per share of $3.19, surpassing the expected $3 per share, and recorded revenue of $6.69 billion, beating the anticipated $6.58 billion. Net income for the third quarter was $2.32 billion, or $3.17 per share, compared to $1.98 billion, or $2.68 per share, the previous year.

McDonald’s experienced a 14% increase in revenue, with global same-store sales growing by 8.8% in the quarter, exceeding estimates. U.S. same-store sales saw an 8.1% increase, attributed to strategic price hikes, marketing campaigns, and growth in digital and delivery orders. International markets, including the United Kingdom, Germany, Canada, China, and Japan, also contributed to the company’s positive performance.

CEO Chris Kempczinski stated that McDonald’s is aligning with its yearly expectations amid the evolving economic landscape.

— Agriculture markets Friday:

Corn: December corn futures rallied 1 1/2 cents to $4.80 3/4 but marked a 14 3/4 cent loss on the week.
Soy complex: November soybeans rose 17 3/4 cents and gave up a nickel on the week. December soymeal rose $12.90 to $442.40 and gained $18.50 week-over-week. December soyoil rose 53 points to 52.27 cents but is down 112 points from a week ago.
Wheat: December SRW wheat futures fell 4 cents to $5.75 1/2 and near mid-range. For the week prices fell 10 1/2 cents. December HRW wheat futures lost 11 3/4 cents to $6.43 and nearer the session low. Prices hit a two-plus year low and for the week lost 27 cents. Spring wheat futures lost 4 1/2 cents to $7.19 3/4, marking a 11-cent loss on the week.
Cotton: December cotton futures fell 21 points on the session before settling at 84.38 cents, marking a 198-point gain on the week.
Cattle: December live cattle futures rose $2.90 to $182.225 and nearer the session high. For the week, December cattle still lost $2.40. November feeder cattle futures rose 40 cents to $236.90 and near mid-range. For the week, November feeders lost $5.325.
Hogs: Nearby December lean hog futures ended the week at $70.475, up $1.85 on the day and $4.475 on the week.

— Ag markets today: Soybeans have firmed this morning, while corn and wheat adopted a weaker tone following two-sided trade overnight. As of 7:30 a.m. ET, corn futures were trading a penny lower, soybeans were 3 to 4 cents higher and wheat futures were 5 to 8 cents lower. Front-month crude oil futures were more than $1.00 lower, and the U.S. dollar index was modestly weaker.

Bulls regain footing in cattle market. Live cattle futures finished strong last Friday, as the December contract filled Monday’s downside gap on the daily chart. Cash fundamentals also strengthened as the week progressed, with packers raising cash bids late Friday in an apparent attempt to buy more cattle, while wholesale beef prices firmed 72 cents for Choice and 43 cents for Select amid movement of 134 loads on Friday.

Cash hog index continues to weaken. The CME lean hog index is down another 24 cents to $77.95 (as of Oct. 26). After strong corrective gains late last week, December lean hog futures finished Friday $7.475 below today’s cash quote. Additional buying in the lead contract is likely to be limited unless the cash index stabilizes.

— Quotes of note:

Fedwatch. In a recent Wall Street Journal article (link) by Nick Timiraos, a prominent figure among those who closely monitor the Federal Reserve, it is suggested that the significant increase in U.S. Treasury yields could potentially bring an end to the Federal Reserve’s historic series of interest rate hikes. This rise in yields has had the effect of constraining both consumer and commercial borrowing, subsequently leading to a reduction in inflationary pressures. Many see the swift rise in long-term interest rates over the past month as having effectively substituted for Fed rate rises. But for now, officials are likely to keep the door open to another hike in December or beyond. Whether they walk through that door depends on incoming data on inflation and growth. What is behind the swift run-up in long-term Treasury yields — to around 5% from 4% in early August? There is evidence it is driven primarily by the rise in the so-called term premium, or the extra compensation that investors demand for holding longer-dated investments. Some economists say that is worth two or three Fed rate hikes.
German leaders worry that Chinese manufacturers will take over wind manufacturing as they did solar-panel production a decade ago and are now doing with electric vehicles. China boasts 10 of the world’s 15 largest turbine manufacturers and can sell turbines at half the price of European manufacturers, owing largely to its cheap coal power. “These technologies will be produced anyway, and the question is whether Europe will have to import them,” German Vice Chancellor Robert Habeck said Friday. Munich-based Siemens Energy, one of the world’s top wind manufacturers, said the German government is prepared to extend as much as €16 billion (or $16.9 billion) in state guarantees to rescue it.
Dr. Vince Malanga: Potential for SPX rally amid oversold conditions and upcoming events. Malanga, president of LaSalle Economics, notes the possibility of a market rally in the near term, driven by various factors and events on the horizon. Despite the presence of a chart gap in the SPX index, which is approximately 3% below the recent closing price, he suggests that both equity and fixed income markets are currently oversold. This oversold condition may make the markets more responsive to positive news rather than negative developments, he believes. Malanga highlights several upcoming events in early November that could influence market dynamics. These events include the treasury auction calendar announcement, the Federal Open Market Committee’s (FOMC) decision on a rate hike, Apple’s earnings report, and the labor market report. Depending on how these events unfold, he writes, they could contribute to pushing the treasury ten-year note yield higher in the short term, possibly reaching 4.25% to 4.5%, and propelling the SPX index toward 4400, potentially surpassing its 200-day moving average at around 4250. He acknowledges that this scenario is just one possibility, and it emphasizes the importance of closely monitoring upcoming events and market dynamics to gain a clearer understanding of the future direction of the financial markets.
Grain trader and analyst Richard Crow sizes up commodity markets:
U.S. weather conditions are favorable for harvest progress, with the Eastern corn belt and double-crop beans likely to be completed soon.
Cold air is expected to move across the U.S.
Brazil’s weather forecast includes limited rains in key regions, particularly in Mato Grosso.
Soy markets have been mostly sideways, unable to break higher or find strong support.
A good crop in Brazil is needed to prevent a sharp market move, but it could also limit price increases. “A crop of 163 million tons is a measuring crop for now. A bad Mato Grosso like the last El Niño could see a crop in the low 150 million tons, which would have the market trading higher.”
The soybean crop in Brazil is typically planted in the North by mid-November and in the South by December.
Excessive rains in the southern part of Brazil may affect crop development.
Delivery period for November contracts begins soon, and some deliveries are expected, given the wide carry.
The meal market is strong due to limited supplies from Argentina, with the U.S. making up the difference.
The corn market is influenced by uncertainties in Brazil’s soybean planting and the strong U.S. dollar.
U.S. producers are holding unsold new crop corn, and market conditions will depend on Brazil’s planting decisions.
The wheat market faces uncertainty, and U.S. wheat is somewhat isolated from global dynamics.
Markets, in general, have a lack of long positions, with wheat and corn having large short positions.
Economic concerns and geopolitical issues are impacting market sentiment.
The cattle market experienced liquidation following a recent on-feed report, with cash market trading reaching new highs.
Feeder cattle availability is expected to decrease in 2024, which may impact deferred feeders.
Margin requirements for cattle and feeders were raised by the CME on Friday.

— Germany’s economy experienced a slight contraction of 0.1% in the third quarter, as per revised data. This follows a modest expansion of 0.1% in the second quarter. These figures indicate that Europe’s largest economy managed to steer clear of a technical recession, which is defined as two consecutive quarters of negative economic growth, earlier in the year. Despite this, high inflation has eroded household purchasing power, although there has been a slight improvement in business sentiment in the past week.

Market perspectives:

— Outside markets: The U.S. dollar index was weaker, with most foreign currencies firmer against the greenback. The yield on the 10-year U.S. Treasury note was higher, trading around 4.89%, with a higher tone in global government bond yields. Crude oil futures were lower, with US crude around $84.40 per barrel and Brent around $88.20 per barrel. Gold and silver futures were firmer, with gold around $2,003 per troy ounce and silver around $23.28 per troy ounce.

— General Motors (GM) and the United Auto Workers (UAW) union have reached a tentative contract agreement, marking the end of the first simultaneous strike against the Detroit Three automakers, which included record wage and benefit hikes. Details of the agreement with GM have not been disclosed yet. Reuters reported (link). This agreement follows similar deals reached recently between the UAW and Ford Motor as well as Chrysler owner Stellantis. These agreements are seen as significant victories for auto laborers, particularly after years of stagnant wages and concessions made by the union following the 2008 financial crisis. GM workers are expected to return to work after an official announcement of the agreement. Talks at GM had stalled over various issues, including pensions and the transition of temporary workers to permanent roles.

— Traders are increasingly willing to do business with Russian metals. Western firms including Citigroup and Trafigura are striking new deals for commodities like aluminum despite the war in Ukraine, according to Bloomberg (link). There aren’t restrictions on trading Russian metal, but many companies have been wary of doing new business for materials originating there.

— Record high in U.S. soybean meal exports anticipated amid growing demand for green diesel. The U.S. is poised to witness record-breaking exports of soybean meal to other nations in the upcoming year, Bloomberg reports (link). USDA predicts that in the 2023-24 season, exports of soybean meal, a byproduct of soybean processing alongside vegetable oil, will reach 13.9 million tons. This projection exceeds the previous record of 13.2 million tons valued at nearly $7 billion, achieved in the season ending in September.

This surge in demand for U.S. soy meal is driven by higher global interest in the product. Drought conditions in Argentina, which is usually the world’s leading soy meal exporter, have limited the country’s available supplies for international shipment.

The growing trend is attributed to increased soybean processing, as both energy and agriculture companies seek to capitalize on incentives for producing cleaner-burning fuel from renewable sources like crops. This surge in production has led to a rise in demand for soyoil, a crucial ingredient in green diesel, consequently boosting the production of soy meal used in livestock feed. This trend is expected to persist, with more U.S. soyoil being directed towards biofuel production rather than food and other domestic purposes.

— Ag trade update: Tunisia tendered to buy 100,000 MT of soft milling wheat and 50,000 MT of feed barley – both optional origin.

— NWS weather outlook: Well below average temperatures and record-breaking cold to continue expanding from the central United States to the Appalachians through the beginning of November... ...Shower activity to stretch from the southern Plains to the Northeast today, with accumulating snowfall forecast across northern Maine... ...Snow squalls possible across parts of the Northern Plains, Upper Midwest, and Great Lakes through Halloween... ...Santa Ana wind and very dry conditions across California will lead to an increased threat of wildfire activity.

Items in Pro Farmer’s First Thing Today include:

• Beans firmer, corn and wheat lower to start the week
• Better rain chances for dry areas of Brazil
• Eurozone economic sentiment slips

CONGRESS

— Senate returns at 3 p.m. ET and plans to continue work on a spending bill minibus and install an ambassador to Israel. Senators will resume amending a minibus appropriations package with an eye on final passage this week of the legislation (HR 4366) covering Agriculture-FDA, Military Construction-VA, and Transportation-HUD spending. Senators last week adopted or defeated 30 of the 40 amendments due for possible floor consideration. “It is my hope that we can wrap up work on these appropriations bills as soon as next week,” Majority Leader Chuck Schumer (D-N.J.) said Thursday.

— Aid to Israel and Ukraine topic of Senate hearing Tuesday. Secretary of State Antony Blinken and Defense Secretary Lloyd Austin testify before Senate appropriators Tuesday on Biden’s request for $106 billion to aid Israel and Ukraine in their fights against Hamas and Russia, as well as border security and other measures.

ISRAEL/HAMAS CONFLICT

— Israel over the weekend announced it had entered a “second stage” of its war against Hamas and on Sunday said its ground operations in Gaza would intensify. Israeli Prime Minister Benjamin Netanyahu reiterated his intent to “destroy” the militant group after its Oct. 7 attack on Israel, which killed more than 1,400 people, mostly civilians. In Gaza, the number of people killed during Israeli strikes since October 7 has risen to around 8,000, the Hamas-controlled Palestinian Ministry of Health said Sunday. The UN will hold an emergency meeting today, where the UAE will seek a resolution on a “humanitarian pause” in the fighting, though Israel has vowed to continue its ground raids in the coming days.

President Biden told Binyamin Netanyahu, Israel’s prime minister, that the flow of aid into the enclave needed to be “immediately and significantly” increased. Supplies are limited and health services are collapsing. Warehouses containing food aid have been raided by civilians.

Of note: Lloyd Austin, Antony Blinken, and Jake Sullivan will meet with Saudi Defense Minister Khalid bin Salman during his visit to Washington today as the Israel-Hamas war threatens to spill over into a wider conflict.

RUSSIA/UKRAINE

— Ukraine’s grain exports fall sharply. Ukraine’s grain exports in October plunged 49.1% from year-ago to 2.15 MMT, according to the country’s ag ministry. Since July 1, Ukraine has exported 8.9 MMT of grain, down 4 MMT (31.0%) from last year. That total included 4.5 MMT of wheat, 3.6 MMT of corn and 679,000 MT of barley.

— Russia proposes slightly bigger fertilizer export quota. Russia’s trade ministry has proposed setting the quota for export of fertilizers at 16.95 MMT from December through May, Russian news agencies reported. The June through November quota was set at 16.3 MMT.

POLICY UPDATE

— U.S. ag economy is healthy, and that’s one reason economists think it could be 2025 before we see a new farm bill. The passage of a new farm bill in the United States appears to face significant challenges and potential gridlock throughout 2024 due to several factors. These factors include political dysfunction, a strong agricultural economy, a lack of urgency, and the commencement of a presidential election year. A survey conducted by the University of Missouri and Farm Journal (link) involving over 60 agricultural economists sheds light on the situation. While economists express some optimism about the agricultural economy for the upcoming year, their views on current economic conditions have remained largely unchanged.

Economists predict that net farm income for 2023 will exceed $140 billion, with a forecast of just over $130 billion for 2024, down from the record $183 billion in 2022. This decline is attributed to the difficulty of replicating the high-income levels of 2022. The focus has shifted to revenue, commodity prices in 2024, and supply factors such as crop yield.

One significant hurdle in passing a new farm bill is the upcoming presidential election year in 2024, which historically tends to delay legislative action on such matters. Political dysfunction, funding issues, competing priorities, and a lack of urgency surrounding agriculture also contribute to the challenges.

According to the survey, 50% of economists believe that a new farm bill will not be passed until 2025, while 20% suggest it might occur within the first half of 2024. The ag economy’s current health may contribute to a lack of urgency, with many economists anticipating a farm bill extension.

The potential consequences of not passing a new farm bill include crop prices falling below break-even levels. Economists express concerns about rising costs and declining crop prices over the next 12 months, which could impact farmers’ financial stability.

Factors impacting crop and livestock prices in the coming months include South American production, export competition from Russia and Brazil, global economic conditions, and domestic demand.

Looking ahead to the next six months. Economists were also asked what factors will impact crop and livestock prices over the next 6 months.

For crops, they said:

South American production and weather favorability.
Export competition from Russia and Brazil.
Global factors including economic health, geopolitical risks, dollar strength and demand impacts on export volumes.
Domestic demand and final size of the 2023 crop.

For livestock, they said:

Tight cattle/beef supplies, sow herd liquidation.
Cost of production, including feed costs and interest rates.
Confidence in domestic consumer demand, export opportunities.

In summary, various factors, including political dynamics, a strong ag economy, and the timing of a presidential election year, are likely to hinder the passage of a new Farm Bill and could lead to gridlock throughout 2024. These challenges have implications for the agricultural industry and the financial well-being of farmers.

— 2022 ERP finally announced. USDA said that over $3 billion is available through the Emergency Relief Program (ERP) to assist row crop and specialty crop growers in offsetting losses caused by natural disasters in 2022. According to Zach Ducheneaux, the Administrator of the Farm Services Agency, 2022 marked another year of weather-related challenges, with some farmers facing their third consecutive year of such challenges.

Starting on Tuesday, producers can apply for ERP benefits, regardless of whether they received a pre-filled form from the USDA or not. USDA anticipates that more than 210,000 producers will be eligible for ERP benefits based on indemnities they received through crop insurance or related USDA crop programs that lack insurance coverage. Two application tracks are available for ERP benefits: one based on crop insurance data and the other on revenue declines resulting from 2022 catastrophes.

To date, a record $19.3 billion in crop insurance indemnities has been paid for 2022 crops, marking the highest amount ever recorded, according to data from the Risk Management Agency.

Comments: Unfortunately, the ERP for 2022 has gone off the rails from what Congress intended when it provided the assistance. The maximum first payment, the factor that serves as a back door pay limit that conflicts with the prescribed pay limit in statute, and the drain of resources on the failed Phase 2 approach all undermine the effort to effectively assist farmers.

CHINA UPDATE

— U.S. is set to increase the number of weekly flights between the U.S. and China from 48 to 70, effective Nov. 9, 2023. This move represents a gradual easing of pandemic-related restrictions on air travel between the two largest economies in the world. The equivalent roundtrips will also see an increase, going from 24 to 35 per week, according to the U.S. Dept. of Transportation (DOT). This decision follows earlier relaxations that had raised the limit from 12 to 24 roundtrips per week, with this latest increase demonstrating a positive trajectory in U.S./China air travel. The DOT is actively engaging in discussions with China’s Civil Aviation Administration to facilitate a broader reopening of the air services market between the two nations, aiming for a phased and predictable approach to capacity entitlements.

This announcement comes shortly after Chinese Foreign Minister Wang Yi concluded discussions in Washington with high-ranking US officials, including Secretary of State Antony Blinken and National Security Advisor Jake Sullivan. During these talks, an agreement in principle was reached for a meeting between President Joe Biden and Chinese President Xi Jinping.

— Hong Kong, facing an exodus, offers money for babies. The city will pay its residents to procreate after the birthrate dropped 40% in three years. Link to details via the WSJ.

TRADE POLICY

— G7 calls for immediate repeal of bans on Japanese food, pressing China. Trade ministers denounce what they consider is rising economic coercion through trade. Link for details.

LIVESTOCK, NUTRITION & FOOD INDUSTRY

— Soaring cocoa prices haunt candy costs, leading to Halloween budget revisions. Commodity markets are casting a spooky shadow over the holiday season as rising cocoa prices drive candy costs to frightening levels just ahead of Halloween, the Wall Street Journal reports (link). This surge in candy prices is causing some consumers to reconsider their candy budgets during the crucial fourth-quarter retail sales period. The National Retail Federation predicts that North Americans will set a record by spending $12.2 billion on Halloween this year, marking a 15% increase from the previous year. Candy alone is expected to account for $3.6 billion in consumer spending, reflecting a 16% rise from 2022.

Inflation is a significant contributor to this year’s sales growth, with candy and gum prices jumping 7.5% in September compared to the same month the previous year. Additionally, cocoa prices have reached multi-decade highs, adding to the cost pressures. For carriers, this means that a substantial portion of the sales increase is driven by inflation rather than higher sales volumes, a less-than-sweet development for the industry.

— HPAI cases surge in U.S. turkey farms, posing endemic threat. The United States is grappling with a growing challenge of Highly Pathogenic Avian Influenza (HPAI) outbreaks, primarily affecting turkey operations. The USDA’s Animal and Plant Health Inspection Service (APHIS) confirmed HPAI in 24 commercial turkey farms across 19 counties in five states: South Dakota, Minnesota, Utah, Iowa, and California. The concerning aspect is that 18 out of these 19 counties had already confirmed infections during the summer of 2023, suggesting the potential for the virus to become endemic in certain areas. As a response to the outbreaks, depopulation measures have been implemented, resulting in the culling of approximately 967,000 commercial turkeys.

POLITICS & ELECTIONS

— President Biden’s challenge: Engaging less-active voters. Nate Cohn, the New York Times’ chief political analyst, writes (link) that in analyzing the strong Democratic performance in recent midterm elections alongside President Biden’s current weakness in polls, a key factor emerges — the political attitudes of engaged versus less-engaged voters. Two distinct groups of respondents from New York Times/Siena College polls over the past year shed light on this issue, he details.

Group A consists of 2,775 respondents who generally align with older demographics, with 33% identifying as Republicans and 31% as Democrats. Approximately 72% are white, and 41% hold a college degree.

Group B comprises 1,534 respondents, skewing younger, with 26% aged 18 to 29 and 17% aged 65 or older. Here, 26% identify as Democrats and 19% as Republicans. Only 54% are white, and 28% have a college degree.

A surprise: Group B, composed of individuals who did not vote in the 2022 midterms, expresses more support for Donald J. Trump in recent Times/Siena polling compared to Group A, which participated in the midterms and largely backs President Biden.

Cohn says this data implies that President Biden faces a significant challenge among less-engaged voters who chose not to vote in the midterms. While self-identified Democrats who abstained from voting in the midterms still support Biden, the margins are substantially narrower compared to those who participated in the elections. This challenge spans various demographic groups, including young voters, Black and Hispanic voters, and even college graduates.

Of note: Cohn concludes these findings defy conventional expectations in American politics, suggesting that the 2020 general electorate was more supportive of Biden and Democrats compared to the 2022 midterm electorate. Higher turnout in future elections may not necessarily favor Biden, he observes, as it draws more Democratic voters to the polls but does not guarantee stronger support from those who stayed home.

Bottom line: The current pattern may disrupt typical Democratic advantages from higher turnout and impact national polling. Cohn adds that it is important to note that these patterns could evolve in the coming year, potentially reverting to more traditional norms. Nonetheless, President Biden’s ability to engage less-active voters remains a significant challenge with potential implications for re-election.

OTHER ITEMS OF NOTE

— President Biden is set to sign a far-reaching executive order on artificial intelligence (AI) today. This order represents a significant effort by the U.S. government to stimulate innovation while addressing concerns that AI could worsen bias, displace workers, and jeopardize national security. The order encompasses a wide range of issues, imposing new safety responsibilities on AI developers and urging various federal agencies to manage the risks associated with AI while assessing their own use of AI tools. Notably, it mandates that companies developing advanced AI systems conduct safety tests and share the results with the government before launching their products. Biden will invoke the Defense Production Act, which lets the president mobilize U.S. industry to support national defense.

Federal agencies will also be urged to increase enforcement. The White House will ask the FTC to step up its role as a watchdog on consumer protection and antitrust violations. Lina Khan, the FTC chair, has signaled that she would aggressively police AI.

KEY LINKS

Policy Updates