News/Markets/Policy Updates: Nov. 20, 2024
— The U.S. closed its embassy in Kyiv on Wednesday warning that it “received specific information of a potential significant air attack” amid rising tensions with Russia. Russian foreign minister Sergei Lavrov said Russia would “do everything possible” to avoid a nuclear war. See Russia/Ukraine section for details. Of note: Vladimir Putin is reportedly ready to talk peace in Ukraine. Russia’s president is open to negotiating a cease-fire arrangement through President-elect Donald Trump, Reuters reports. But the Kremlin is said to be insisting that it won’t concede major territorial gains in Ukraine and wants to forbid Kyiv from joining NATO. While Trump has pledged a speedy end to the war, fighting has intensified. — Republicans hesitate on tariff-funded tax cuts. Key Republican lawmakers express skepticism about using tariffs to fund tax cuts, citing economic and political concerns. While some, like Sen. Chuck Grassley (R-Iowa) remain open to discussion pending concrete proposals from former President Trump, others, including Sen. Rand Paul (R-Ky.), liken tariffs to a “sales tax” and doubt their inclusion in the tax bill. Free-trade advocates warn of potential macroeconomic consequences. — Trump taps Howard Lutnick for Commerce Secretary, signaling tariff-heavy trade strategy. President-elect Donald Trump’s selection of Howard Lutnick, the CEO of Cantor Fitzgerald, as Commerce Secretary highlights plans to leverage tariffs in trade negotiations, with Lutnick emphasizing their use as both a revenue source and bargaining tool. Lutnick has called the tariffs a negotiating tool that could be used to convince other countries to bring down their own levies or to force companies to move production to the U.S. He has said Trump would avoid taxes on products U.S. companies don’t make. Commerce oversees the International Trade Administration, an agency in charge of enforcing trade laws and investigating unfair trade practices. The appointment raises questions about the role of Robert Lighthizer, a prominent China hawk and decoupling advocate, who might still secure a key position such as National Economic Council leader or ambassador to China. The nomination marks Lutnick’s transition from co-chair of Trump’s transition team to a pivotal role in shaping U.S. economic policy. Of note: Trump said that the Commerce Secretary would have “additional direct responsibility for the Office of the United States Trade Representative.” The phrase means that Trump may try to fold the latter position within the Commerce Department, a move that has been tried before to combine government trade work. Trump’s trade agenda is heavily focused on imposing substantial tariffs, particularly targeting China. He has proposed a 60% tariff on Chinese goods and 10-20% tariffs on imports from other countries. Lutnick has been a vocal supporter of these tariffs, suggesting they could replace income tax revenue over time. He believes that by making American businesses more competitive through tariffs, it could lead to lower overall tax rates. Lutnick’s vision aligns with Trump’s historical approach to trade, which emphasizes protectionism to bolster U.S. manufacturing and reduce reliance on imports. During a recent rally, Lutnick remarked that America’s economic prosperity in the early 1900s was due to tariffs rather than income taxes, indicating his belief in a return to such policies. Lutnick has said the incoming administration would use tariffs as a bargaining chip with other countries. “We’ll make a bunch of money on the tariffs, but mostly everybody else is going to negotiate with us,” he said on CNBC. Lutnick’s appointment signals an aggressive stance on trade that could lead to increased tensions with trading partners. The Commerce Department plays a crucial role in enforcing tariffs and negotiating trade agreements, which may become contentious under Lutnick’s leadership. Economists have expressed concerns that such high tariffs could lead to retaliatory measures from other nations, potentially resulting in higher prices for consumers and disruptions in global supply chains. On China, Lutnick has accused the country of being the source of fentanyl in the US, saying that “China is attacking America from its guts.” Kevin Chen, associate research fellow at the S. Rajaratnam School of International Studies, told the South China Morning Post, “There is little question that he will push forward with tariffs That being said, he has also suggested that the tariffs could be used to negotiate trade deals with other countries,” he said. Chen suggested that the choice of Lutnick —alongside other China hawks joining Trump’s team including Marco Rubio as secretary of state and Mike Waltz as national security adviser — could be “very dangerous for U.S./China relations” given the Commerce Department’s oversight of export controls. “Lutnick is likely to focus tariffs on China’s manufacturing sector, especially for goods that the U.S. already produces. The likelihood of this leading to another U.S./China trade war is too high to ignore,” he said. “Lutnick fits in well with the trend of Trump’s cabinet picks … [as] he’s a China hawk who shares Trump’s strong views on the threat posed by China and how to address it.” Asked about Lutnick’s nomination, Chinese foreign ministry spokesman Lin Jian said he would not comment on U.S. internal affairs but added that a trade war “will not produce any winner and is in no one’s interest.” — Trump is taking a closer look at Sen. Bill Hagerty (R-Tenn.) to potentially serve as Treasury Secretary, Axios reports. Hagerty, a former private-equity investor who was Trump’s ambassador to Japan, is one of three apparent finalists, along with former Fed governor Kevin Warsh and Apollo CEO Marc Rowan. The Treasury position is key as the Cabinet member will play in a key role in major issues, including: — U.S. businesses brace for potential Trump tariffs. American companies are accelerating inventory orders ahead of Donald Trump’s inauguration, fearing the implementation of his proposed tariffs on imports. Trump has suggested levies of 10-20% on all imports and up to 60% on Chinese goods. Firms are also strategizing for potential impacts, including price adjustments and diversifying away from Chinese manufacturers, the Wall Street Journal reports (link). — Tariffs and pricing impacts. Walmart acknowledged the retailer would probably raise prices on some goods if Donald Trump moves forward with plans to enact sweeping tariffs. Walmart’s CFO John David Rainey stated that prices on some items may increase but it is uncertain which products might see price hikes due to the tariffs. A Walmart spokesperson indicated that any price changes are speculative, but future tariff-induced costs could burden sensitive shoppers. Lowe’s words were more circumspect, with the home-improvement retailer’s executives noting tariffs would lift costs but also saying they were waiting to see what happens when the new administration takes office in January. Walmart said shoppers are resilient but are still spending more on food than they have historically. Lowe’s said homeowners are still waiting for lower interest rates to embark on big home-improvement projects. — Donald Trump said he would nominate TV personality Dr. Mehmet Oz to lead the Centers for Medicare & Medicaid Services (CMS) and suggested plans for cuts at the agency. Oz will “cut waste and fraud within our Country’s most expensive Government Agency, which is a third of our Nation’s Healthcare spend, and a quarter of our entire National Budget,” Trump said in an announcement. Trump wants Oz to work closely with Robert F. Kennedy Jr., his nominee for secretary of the Health and Human Services Department, which includes CMS. Said Trump: “Dr. Oz will work closely with Robert F. Kennedy Jr. to take on the illness industrial complex, and all the horrible chronic diseases left in its wake. Our broken Healthcare System harms everyday Americans, and crushes our Country’s budget.” — Sen. Chuck Grassley (R-Iowa) expressed concerns regarding Robert F. Kennedy Jr.’s nomination as Secretary of Health and Human Services (HHS) and its potential implications for the U.S. food system. Grassley indicated a willingness to meet with Kennedy to discuss these issues prior to any confirmation hearing, emphasizing the need for dialogue about agricultural practices and policies. Grassley’s apprehensions stem from Kennedy’s commitment to overhaul the U.S. food system, which includes proposals to ban processed foods, certain pesticides, and other products. These changes are part of Kennedy’s broader agenda to “Make America Healthy Again.” While Grassley acknowledges that reforms may be necessary within the food system, he also cautioned that Kennedy might not fully understand the disruptive impact that such sweeping regulations could have on the agricultural sector. Grassley noted that he might need to spend considerable time educating Kennedy about agriculture, highlighting the complexities and challenges of implementing significant changes in food policy. — Trump transition co-chair Linda McMahon has been nominated for the role of Education Secretary after being passed over for Commerce Secretary. She was the former head of the Small Business Administration (SBA) in Trump’s first administration. McMahon, 76, is best known as the co-founder of World Wrestling Entertainment (WWE), where she played a pivotal role in transforming the company into a global entertainment powerhouse. She served as WWE’s CEO until 2009, after which she transitioned into politics. McMahon has previously run for a U.S. Senate seat in Connecticut twice but was unsuccessful in both attempts, losing to Democrats Richard Blumenthal in 2010 and Chris Murphy in 2012. Her political career includes a brief tenure on the Connecticut State Board of Education from 2009 to 2010, where she expressed her longstanding interest in education and her earlier aspirations to become a teacher. Despite her limited formal experience in education policy, McMahon has been an advocate for school choice and charter schools throughout her political engagements. Trump’s nomination of McMahon comes with a broader agenda to potentially dismantle the Department of Education, but he will need Congress’ approval. During his campaign, he criticized the department as ineffective and pledged to return educational authority to the states. He has articulated plans to cut federal funding for programs he deems inappropriate, including those promoting critical race theory and gender ideology. In his announcement regarding McMahon’s nomination, Trump stated that she would “fight tirelessly” to expand educational choice across the nation and emphasized her role in sending education “BACK TO THE STATES” — a key aspect of his education policy vision. — What about a new USDA Secretary? Sources say Trump’s team is taking another look at some of the potential nominees on a long list. Contacts say they do not like how some of the potential nominees have lobbied for the position. |
| MARKET FOCUS |
— Equities today: Asian and European stock markets were mixed overnight. U.S. Dow opened slightly higher but then turned lower. In Asia, Japan -0.2%. Hong Kong +0.2%. China +0.7%. India +0.3%. In Europe, at midday, London +0.1%. Paris +0.2%. Frankfurt +0.4%.
U.S. equities yesterday: Another mixed finish on Wall Street, with the Dow down 120.66 points, 0.28%, at 43,268.94. The Nasdaq rose 195.66 points, 1.04%, at 18,987.47. The S&P 500 was up 23.36 points, 0.40%, at 5,916.98.
— Wall Street awaits Nvidia earnings amid AI boom and tariff concerns. Nvidia is set to release its Q3 earnings after the bell, with investors eager for updates on its Blackwell chip amid overheating concerns. The AI-driven chipmaker has thrived recently but faces potential risks from Trump’s planned tariffs, which could escalate trade tensions with China and impact its global operations. Perspective: An investor who bought $10,000 worth of Nvidia in January 2022 would be sitting on over $100,000 worth of shares today.
— Retail giants beat expectations but flag Trump tariff concerns. Walmart and Lowe’s surpassed earnings expectations and raised their full-year forecasts, signaling resilience amid consumer spending challenges. Walmart reported earnings of $0.58 per share on $169.6 billion in revenue, benefiting from affluent shoppers. It also warned of potential price hikes due to tariffs under the incoming Trump administration. Lowe’s posted a third-quarter profit of $2.89 per share on $20.2 billion in revenue, aided by hurricane recovery efforts. While improving its fiscal 2024 outlook, the retailer noted ongoing affordability challenges in home improvement spending due to inflation and high interest rates.
Both firms joined others warning about the potential for higher prices from tariffs.
— Target misses Q3 earnings and cuts full-year outlook. Target fell short of Wall Street’s third-quarter expectations, with earnings per share missing estimates by 20%, marking the retailer’s biggest miss in two years. Despite a slight increase in customer traffic, the company cut its full-year adjusted earnings guidance to $8.30-$8.90 per share, down from its August projection of $9-$9.70. This also marks Target’s first revenue shortfall since August 2023.
— Comcast to spin off cable network channels, forming new entity. Comcast announced it is spinning off several of its cable networks, including CNBC, MSNBC, E!, Syfy, Golf Channel, USA, and Oxygen, into a new standalone entity. This move, expected to take a year, will include digital assets like Fandango, Rotten Tomatoes, GolfNow, and Sports Engine. Bravo and NBCUniversal’s streaming platform Peacock will remain with Comcast. The new entity, provisionally named “SpinCo,” generated $7 billion in revenue over the past year and will be led by NBCUniversal’s Mark Lazarus, with Anand Kini as CFO. Comcast CEO Brian Roberts will retain economic interests in SpinCo but will not hold an operational role.
— Crude oil futures are higher today, with U.S crude around $70.10 per barrel and Brent around $73.80 per barrel.
Oil prices were relatively flat on Tuesday, with Brent crude settling at $73.31 per barrel, up $0.01, and WTI crude closing at $69.39 per barrel, up $0.23 (0.3%). Prices remained steady as escalating tensions in the Russia-Ukraine war raised concerns about potential supply disruptions.
— Ag markets today: Corn, soybeans and wheat were pressured overnight by a stronger U.S. dollar and a lack of supportive news. As of 7:30 a.m. ET, corn futures were trading 1 to 2 cents lower, soybeans were 6 to 7 cents lower and wheat futures were 2 to 4 cents lower. The U.S. dollar index was around 350 points higher, and front-month crude oil futures were about 50 cents higher.
Choice boxed beef prices firmed $1.51 to $308.79 on Tuesday, marking the second straight strong daily gain. Select dropped $3.54 to $271.91. That increased the Choice/Select spread to a wide $36.88.
The CME lean hog index is down another 40 cents to $88.09 as of Nov. 18, the seventh decline in the last eight days during which the index has dropped $2.52. The pork cutout fell $2.39 on Tuesday to $94.68 amid sharp declines in primal loins, bellies and picnics, though movement improved to 393.3 loads, signaling strong retailer demand on the price drop.
— Agriculture markets yesterday:
• Corn: December corn futures fell 2 cents to $4.27 1/4 and near the session low.
• Soy complex: January soybeans fell 11 1/4 cents to $9.98 1/2, while December soymeal fell $1.70 to $288.60, each forging low-range closes. December soyoil fell 68 points to 44.84 cents.
• Wheat: December SRW futures rallied 2 1/2 cents to $5.49 3/4 though closed well off intraday highs. December HRW futures climbed 3 cents to $5.58 1/4. December HRS futures rose 1 3/4 cents to $5.86 3/4.
• Cotton: December cotton rose 27 points to 66.89 cents, nearer the session high.
• Cattle: December live cattle futures surged $2.475 higher to $186.575 and closed on session highs. January feeder cattle futures climbed $2.50 to $252.00, closing on session highs.
• Hogs: December lean hogs fell 47 1/2 cents to $79.55, nearer the daily low and hit a three-week low.
— Of note:
• Getting ready for tariffs. “A big part of our playbook is to work closely with our suppliers to manage whatever comes our way.” — William Boltz, executive vice president of merchandising at home-improvement retailer Lowe’s, on the prospect of new tariffs.
• 1 million metric tons: How much the global copper supply must grow each year through 2050, estimates mining giant Glencore. That would require annually adding the equivalent of the world’s largest mine, Chile’s Escondida. Glencore is digging into America’s junk drawers, old phones and landfills in search of bits of copper to meet the needs of the energy transition and data boom.
• Christmas cheer. “Overall, we are feeling good about holiday. [But] consumers are still discerning.” —John David Rainey, Walmart’s chief financial officer.
Market perspectives:
— Outside markets: The U.S. dollar index was higher, with the euro and British pound weaker against the greenback. The yield on the 10-year U.S. Treasury note rose, trading around 4.43%, with a mixed-to-positive tone in global government bond yields. Crude oil futures were higher, with U.S crude around $70.10 per barrel and Brent around $73.80 per barrel. Gold futures were up and silver futures were down, with gold around $2,637 per troy ounce and silver around $31.17 per troy ounce.
— Malaysia increases crude palm oil export tax for December. Malaysia has raised its crude palm oil export tax to 10% for December, up from 9.5% in November. The reference price has also been increased to 4,471.39 ringgit ($1,001.21) per metric ton, compared to 3,949.73 ringgit in the previous month. The maximum tax rate of 10% applies when prices surpass 4,050 ringgit per metric ton.
— USDA daily export sales:
• 202,000 MT soybeans to China, 2024-2025 marketing year
• 226,200 metric tons of soybeans received in the reporting period to unknown destinations 2024-2025 marketing year
— Ag trade update: Algeria purchased an unspecified amount of corn to be sourced from Brazil or Argentina and an unspecified amount of Canadian durum wheat. Taiwan tendered to buy 80,000 MT of U.S. milling wheat. Jordan tendered to buy up to 120,000 MT of optional origin milling wheat.
— NWS outlook: Back-to-back powerful Pacific storm systems to impact the West Coast through the end of this week with heavy rain, life-threatening flooding, strong winds, and higher elevation mountain snow... ...Near blizzard conditions are possible through this evening across the northern Plains... ...Heavy snow is likely throughout parts of the central Appalachians beginning on Thursday, with a separate burst of snowfall possible across northeast Pennsylvania and neighboring regions of the Northeast Thursday night into Friday.
Items in Pro Farmer’s First Thing Today include:
• Grains weaker overnight
• Choice beef stabilizes, Select continues to weaken
• Cash hog fundamentals continue recent slump
• China leaves lending benchmark LPRs unchanged
• UK consumer inflation jumps more than expected in October
| CONGRESS |
— House Ethics Committee weighs releasing Matt Gaetz investigation report. The House Ethics Committee will decide whether to release its report on allegations of sexual misconduct against Matt Gaetz, Trump’s nominee for attorney general. A simple majority vote is needed, with at least one Democrat signaling support for public disclosure. Some Republicans argue the panel should defer, citing loss of jurisdiction after Gaetz’s resignation. The outcome could impact Senate deliberations as Trump lobbies for Gaetz’s confirmation.
JD Vance will face a big test today when he accompanies attorney general nominee Matt Gaetz at meetings with senators as Donald Trump’s team tries to convince Republicans to confirm him, according to the Washington Post.
Of note: A hacker is said to have gained access to a computer file containing damaging testimony about Matt Gaetz, Trump’s choice for attorney general.
— Omnibus spending bill faces long odds amid GOP skepticism. A year-end omnibus spending bill appears unlikely as conservatives push back and Senate Republicans eye greater leverage in 2025. Senate Minority Leader Mitch McConnell (R-Ky.) has signaled openness to a short-term funding bill, which could avoid clashes with the upcoming debt ceiling deadline but leave unresolved issues like disaster aid.
— House Democrats choose leadership with no changes for next Congress. House Democrats Tuesday made their selections for leadership for the new Congress that takes over in January, with House Minority Leader Hakeem Jeffries (D-N.Y.), Minority Whip Katherine Clark (D-Mass.) Caucus Chairman Pete Aguilar (D-Calif.) all to retain their posts. There were no opposing candidates in the process. Democrats are on track to hold at least 212 seats as the 119th Congress begins with at least 218 seats for Republicans and 5 seats yet to be called by the Associated Press.
| ISRAEL/HAMAS CONFLICT |
— United States envoy Amos Hochstein said a ceasefire deal between Israel and Lebanon is “within our grasp,” but added it was ultimately “the decision of the parties.” Hochstein was addressing reporters in Beirut on Tuesday after a meeting with Lebanese parliament speaker Nabih Berri, the interlocutor with Hezbollah in the talks. He said there had been “constructive” and “very good discussions to narrow the gaps… We have a real opportunity to bring conflict to an end,” he added. “The window is now.” On Wednesday, he said that further progress was made, before departing for Israel to try to bring the negotiations “to a close.”
| RUSSIA/UKRAINE |
— The U.S. Embassy in Kyiv has temporarily closed its doors due to a warning of a “potential significant air attack.” This decision follows the embassy receiving specific intelligence suggesting an imminent threat, prompting officials to instruct embassy staff to shelter in place and advising U.S. citizens in Ukraine to be prepared for immediate shelter if an air alert is issued. This warning is particularly notable given the context of escalating tensions in the ongoing Russia/Ukraine conflict. It comes just a day after Ukraine launched American-supplied long-range ATACMS missiles into Russian territory for the first time, marking a significant shift in military engagement authorized by President Biden. The strikes targeted a weapons warehouse in Russia’s Bryansk region, which has heightened fears of retaliation from Moscow.
In response to the U.S. warning, other Western embassies in Kyiv, including those of Italy and Greece, have also closed their operations as a precautionary measure. The French embassy remains open but has advised its citizens to exercise caution amid the heightened threat level.
Russian President Vladimir Putin has reacted to these developments by reiterating that any attacks on Russia supported by nuclear-capable nations could lead to severe consequences, including potential nuclear responses. This statement underscores the gravity of the current situation, and the increased risks associated with Western military support for Ukraine.
— Russian farmers switching away from wheat. Russian farmers say they will sow less wheat after heavy losses this year, switching to more profitable crops such as peas, lentils, or sunflowers, Reuters reported. Winter wheat plantings likely declined by 10% to the lowest since 2019, according to Rusagrotrans, Russia’s primary grain rail carrier. Some farmers say they have already decided to plant less spring wheat next year. Others are waiting to see how global wheat prices perform in the next few weeks before making a final decision.
| POLICY UPDATE |
— USDA launches $2 billion in aid for specialty crops and disaster recovery, using funds allocated through the department’s Commodity Credit Corporation. As expected, USDA officially announced $2 billion through the new Marketing Assistance for Specialty Crops initiative to support domestic supply and market expansion for fruits, vegetables, and nuts. Additionally, $140 million will fund the Commodity Storage Assistance Program, aimed at restoring crop storage infrastructure lost to 2024 natural disasters, particularly benefiting Southeastern producers after Hurricanes Debby, Helene, and Milton.
Marketing Assistance Program for Specialty Crops. This program will help specialty crop growers who typically face higher marketing costs due to the perishable nature of their products and specialized handling requirements. Applications are expected to open in December 2024. The initiative builds on previous USDA investments supporting the U.S. specialty crop industry, including:
• The Assisting Specialty Crop Exports (ASCE) initiative, providing $65 million for projects to increase global exports and expand to new markets.
• The Specialty Crop Block Grant Program (SCBGP), which awarded $72.9 million in both 2022 and 2023 to fund innovative projects in the specialty crop sector.
Commodity Storage Assistance Program. This program will provide access to commercial storage facilities such as grain elevators and packinghouses for producers experiencing reduced storage access due to 2024 natural disasters. It expands on the Emergency Grain Storage Assistance Program, which helped producers affected by natural disasters in 2021 and 2022. Applications are expected to be available in December 2024.
Additional support and flexibilities. USDA is offering various forms of assistance to agricultural producers impacted by natural disasters:
• Extended signup periods for disaster assistance programs, including the Emergency Conservation Program and Emergency Forest Restoration Program, now open until June 1, 2025.
• Crop insurance indemnities totaling more than $6 billion for the 2024 crop year, with nearly $1 billion paid to producers impacted by hurricanes and tropical storms.
— The same farm bill leaders who couldn’t get a new farm bill in two years are trying a stealth farm bill approach. Those wanting a more robust Title I safety net want to try another approach: putting some reference price increases and crop insurance reimbursements in a must-pass bill yet this year. A similar tactic was used before for cotton. But some conservative Republicans, sources say, may balk at this approach.
— Race to allocate chips act grants amid uncertainty. U.S. officials are scrambling to finalize billions in semiconductor grants before President Biden leaves office. The Commerce Department has provisionally allocated most of the Chips Act funding to boost domestic chip production but still has nearly $30 billion tied up in negotiations. President-elect Trump has questioned the program’s viability, advocating for taxing imported chips over grants. Prolonged talks and stringent project evaluations have frustrated chip companies relying on the funds, prompting the department to expedite grant approvals in the final months of Biden’s term.
| PERSONNEL |
— Rep. David Scott addresses health, plans return to Congress. Rep. David Scott (D-Ga.) is undergoing treatment for persistent back issues and has missed two weeks of votes in Washington. The 79-year-old congressman assured his constituents he will return to his duties “very strong” when the House reconvenes on Dec. 3. “I had to go ahead and take care of myself so I can be very strong, and I am,” Scott told the Atlanta Journal-Constitution. Despite health concerns and criticisms about his stamina, Scott remains a key figure in Congress as the top Democrat on the House Agriculture Committee.
— Branstad retires at Food Prize. Former Iowa Gov. Terry Branstad will retire as president of the World Food Prize Foundation, sponsor of the annual $500,000 World Food Prize, on Jan. 31, with Mashal Husain, the foundation’s chief operating officer, taking his place.
| CHINA UPDATE |
— The U.S./China Economic and Security Review Commission (USCC) released its 2024 annual report to Congress. This report continues the Commission’s mandate to monitor and assess the national security implications of the economic and trade relationship between the United States and China. Here are the key highlights from the 2024 report:
Ongoing tensions and strategic concerns
• The report emphasizes that U.S./China relations remain fraught with tensions, particularly in areas such as technology transfer, military capabilities, and geopolitical strategies. It notes that high-level diplomatic engagements have not translated into significant improvements in bilateral relations.
• The Commission warns that China is increasingly leveraging its economic and military capabilities to assert its influence globally, raising concerns about its aggressive foreign policy, especially regarding Taiwan.
Focus areas for congressional action
• The USCC has identified several critical areas where it recommends legislative action. This includes enhancing export controls, improving transparency in foreign investments, and addressing cybersecurity threats posed by Chinese technology.
• A notable recommendation is to expand the authority of the Committee on Foreign Investment in the United States (CFIUS) to scrutinize investments that could pose national security risks, particularly those related to artificial intelligence and advanced technologies.
Economic challenges in China
• The report highlights structural economic challenges facing China, including a sluggish post-Covid recovery and an unsustainable debt burden from previous investments in real estate and infrastructure. These factors may hinder China’s ability to compete effectively in high-tech sectors.
• The Commission also points out issues within China’s education system that affect its capacity to develop a skilled workforce necessary for technological advancement.
Taiwan and defense strategies
• A significant portion of the report focuses on Taiwan, advocating for stronger U.S. support for Taiwan’s defense capabilities. This includes recommendations for military training and economic sanctions against China if it were to invade Taiwan.
• The USCC suggests creating a joint U.S.-Taiwan center to counter misinformation and cyber threats from China.
Bottom line: The 2024 Annual Report serves as a comprehensive assessment of the current state of U.S./China relations, reflecting on both economic interdependencies and security challenges. The USCC’s recommendations aim to guide Congress in formulating policies that address these complex dynamics effectively. The report underscores a bipartisan recognition of the need for vigilance in managing the evolving relationship with China, particularly considering its assertive global posture.
— Reuters poll: Trump tariffs will lower Chinese economic growth. The U.S. could impose nearly 40% tariffs on imports from China early next year, a Reuters poll of economists showed, potentially slicing growth in the world’s second-biggest economy by up to 1 percentage point. The poll, the first on China’s economy by Reuters since Donald Trump’s election victory on Nov. 5, predicts the president-elect will resist starting off with blanket 60% tariffs on Chinese goods, as he has threatened. The poll predicted new U.S. tariffs would reduce China’s 2025 economic growth by around 0.5 to 1.0 percentage point.
| ENERGY & CLIMATE CHANGE |
— Exxon Mobil and LG Chem strike lithium supply deal amid growing demand. Exxon Mobil has signed a non-binding agreement to supply lithium to LG Chem, sourced from a brine deposit spanning Arkansas to Texas using direct lithium extraction technology. The lithium will support LG Chem’s Tennessee cathode facility, set to open next year. Exxon and other oil companies are investing in lithium projects, betting on rising demand and leveraging similarities with petroleum extraction processes. Terms of the deal are still under negotiation.
— Summit Carbon Solutions resubmits pipeline permit application in South Dakota. Summit Carbon Solutions has refiled for a new permit for its 700-mile carbon capture pipeline route through South Dakota, part of a larger 2,500-mile project spanning five states. The pipeline will transport CO₂ from 57 ethanol plants to be stored in North Dakota using Class VI injection wells. Construction is set to begin in 2026, with operations starting in 2027. The project also offers additional capacity for green fuels and industrial uses. Public safety meetings are ongoing as the company seeks support amid regulatory hurdles.
— OMB schedules additional meetings over cellulosic biofuel waiver proposal. The Office of Management and Budget (OMB) has scheduled three meetings regarding the EPA’s proposed rule to partially waive 2024 cellulosic biofuel volume obligations and extend the compliance deadline.
Meetings:
• Nov. 22: American Fuel and Petrochemical Manufacturers, who petitioned for the waiver.
• Dec. 2: Policy Nexus Advisors on behalf of Marathon Ashland Petroleum Company.
• Dec. 5: Sessions with NATSO (truck stops/travel centers trade group) and SIGMA (fuel marketers/chain retailers).
Of note: No meetings have been scheduled with biofuel advocates, such as the Renewable Fuels Association. EPA’s proposal is not anticipated to significantly lower the 2024 Renewable Volume Obligations (RVOs) for cellulosic biofuels.
| LIVESTOCK, NUTRITION & FOOD INDUSTRY |
— HPAI spreads in California: child case and poultry impact reported. California public health officials are investigating a possible case of highly pathogenic avian influenza (HPAI) in a child with mild respiratory symptoms. Family members tested negative, and exposed daycare contacts are being monitored. Concurrently, the state has confirmed new HPAI cases in commercial poultry operations, impacting nearly 700,000 birds as of Nov. 14. Over the past month, California has recorded 17 commercial and 4 backyard flock outbreaks, totaling 3.96 million birds. Since the outbreak began, 11.97 million birds across 60 commercial and 30 backyard flocks have been affected. Additionally, 202 cases in dairy cattle were confirmed in the last 30 days, bringing the total to 336 cases.
| KEY LINKS |
WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | | Russia/Ukraine war, lessons learned | | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum |