Biden to Sign Inflation Reduction Act into Law Today, Celebration in Washington Sept. 6

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Tuesday primaries: Voters in Wyoming and Alaska head to the polls

 

                                                In Today’s Digital Newspaper

 

President Joe Biden today will sign the Inflation Reduction Act (IRA) into law and deliver remarks. He took a pause from his vacation in South Carolina to return to the White House for a signing ceremony in the State Dining Room. Congress passed the bill Friday evening. Biden will hold a celebration in Washington on Sept. 6, after lawmakers have returned from their summer recess.

The Biden administration is dispatching Cabinet officials across the country, targeting states where Democrats are in tight re-election bids. USDA Secretary Tom Vilsack will make two stops in Colorado this week to appear with Sen. Michael Bennet (D-Colo.), a vulnerable member of the Senate, and then back to his home state of Iowa to appear with Rep. Cindy Axne (D-Iowa) as she seeks re-election. Vilsack will also attend the Iowa State Fair while in Des Moines on Thursday. In addition, Biden “plans to hold a Cabinet meeting” and “will travel across the country to highlight how the Inflation Reduction Act will save money on prescription drugs, cut health care premiums, and cut energy costs,” Chief of Staff Ron Klain said in a memo distributed by the White House.

White House "by the numbers" fact sheet on IRA... only mention of agriculture is "Advance cost-saving clean energy projects at rural electric cooperatives serving 42 million people." Link.

USDA daily export sale: 228,606 metric tons of soybeans for delivery to Mexico during the 2022-2023 marketing year.

Home Depot and Walmart beat expectations. The two big retailers reported better than expected sales and profit, even as higher inflation and a spending shift toward services have pinched retailers this year. However, Walmart has canceled “billions of dollars” in orders, its CEO says.

Home builder confidence fell six points to 49, hitting the lowest level since May 2020 and marking the eighth consecutive month of decline. Given the tumble, economists warn of an ongoing housing market cool down if not housing recession.

The federal government is close to announcing water conservation mandates for the seven Southwest states that rely on the Colorado River, the AP reports. Officials from those states also missed a U.S. Bureau of Reclamation deadline yesterday to agree on a plan to cut their water usage by at least 15% to maintain the river's storage reservoirs from falling further.

U.S. approves nearly all tech exports to China, data shows. Critics say the Commerce Department-led export-controls process needs an urgent overhaul, while others say the U.S. needs allies on board first.

Taiwan visits by U.S. congressional delegations are actually pretty common. At least 149 U.S. lawmakers have visited Taiwan in the past decade, and 33 have gone during the 19 months of the Biden administration alone, according to Bloomberg.

Primary season continues today as voters in Wyoming and Alaska are set to head to the polls. In Wyoming, Republican Rep. Liz Cheney -- vice chair of the House select committee investigating the January 6 attack on the U.S. Capitol and the GOP's most outspoken critic of former President Donald Trump -- is trying to hold on to her seat. She faces a major uphill battle with the latest poll signaling a nearly 30-point spread. Today, she is running against a primary challenger backed by Trump in a state where he won 70% of the vote in the 2020 election. Trump had endorsed Harriet Hageman, a water and natural resources attorney who has called the 2020 election “rigged” against the former president. Separately, voters in Alaska are casting ballots today in two separate elections for the same seat, and Sarah Palin is among those on the ballot.

Russian authorities evacuated homes and halted trains in northern Crimea after a fire at an ammunition depot that damaged rail tracks, a fresh blow to Russia’s war efforts in Ukraine. Meanwhile, Ukraine again says Russia is stealing “millions of tonnes” of grain from areas of Ukraine that it currently occupies.

The U.K. became the first country to approve a two-in-one Covid-19 vaccine from Moderna that is specifically formulated to target both the original coronavirus strain and BA.1, the first omicron variant. Findings show it could similarly combat newer omicron strains, coming as the world braces for fall booster shot campaigns.

The number of migrants arrested at the U.S. southern border hit a record 1.82 million so far this fiscal year, according to figures Monday from U.S. Customs and Border Protection. Arrests for the fiscal year ending Sept. 30 are expected to break the two million mark for the first time, analysts said, compared with the prior year's record of 1.66 million.

First Lady Jill Biden tested positive for Covid-19.

 

MARKET FOCUS

Equities today: Global stock markets were mixed to firmer overnight. U.S. Dow opened around 40 points lower. Walmart shares rose after second-quarter earnings topped expectations as thrifty consumers sought bargains (sales grew, but profits tightened). Home Depot also beat and reaffirmed its outlook. Target and Costco gained. Lowe’s reports earnings Wednesday morning. In Asia, Japan -0.01%. Hong Kong -1.05%. China +0.05%. India +0.46%. In Europe, at midday, London +0.51%. Paris +0.24%. Frankfurt +0.52%.

     U.S. equities yesterday: All three major indices finished with gains after moving into and staying in positive territory after midday. The Dow ended up 151.39 points, 0.45%, at 33,912.44. The 30-stock Dow also ended the day above its 200-day moving average for the first time since April 20, a sign that markets may be headed for an uptrend. Notable Dow gainers included Disney, which rose more than 2% after hedge fund manager Dan Loeb bought a new stake in the entertainment giant. The Nasdaq rose 80.87 points, 0.62%, at 13,128.05. The S&P 500 rose 16.99 points, 0.40%, at 4,297.14.

Agriculture markets yesterday:

  • Corn: December corn fell 14 cents to $6.28 1/4.
  • Soy complex: November soybeans fell 42 cents to $14.12 1/4, the contract’s lowest closing price since Aug. 8 but up over 26 cents off the session low. September soymeal fell $12.50 to $452.20. September soyoil fell 59 points to 68.94 cents.
  • Wheat: September SRW wheat fell 5 1/4 cents to $8.00 3/4. September HRW wheat fell 6 1/2 cents to $8.82 3/4. September spring wheat fell 8 3/4 cents to $9.10 3/4.
  • Cotton: December cotton futures rose the expanded daily limit of 500 points to 113.59 cents, the contract’s highest closing price since June 21
  • Cattle: October live cattle fell 70 cents to $143.80, the lowest closing price since Aug. 9, while September feeder cattle fell 37.5 cents to $183.00.
  • Hogs: October lean hogs rose 55 cents to $100.575, near the session high. The CME lean hog index rose 7 cents to $121.93 (as of Aug. 11), near a 14-month high posted last week. Today’s index is expected to drop 22 cents.
     

Ag markets today: Corn, soybean and wheat futures extended yesterday’s losses overnight, but all three markets held above Monday’s lows. As of 7:30 a.m. ET, corn futures were trading 4 to 6 cents lower, soybeans were 10 to 20 cents lower and wheat futures were 9 to 12 cents lower. Front-month crude oil futures were around 75 cents higher and the U.S. dollar index was nearly 400 points higher.

Technical viewpoints from Jim Wyckoff:

     Aug 16 Corn

     Aug 16 Soybeans

     Aug 16 Crude

     Aug 16 Bonds

     Aug 16 Euro

     Aug 16 Gold

On tap today:

     • U.S. housing starts are expected to fall to an annual pace of 1.52 million in July from 1.559 million one month earlier. (8:30 a.m. ET)
     • Canada's consumer price index for July is out at 8:30 a.m. ET.
     • U.S. industrial production for July is expected to increase 0.3% from the prior month. (9:15 a.m. ET)

U.S. recession watch: ports. West Coast ports are dropping signals about a slowdown in U.S. demand, with the number of inbound containers falling in July. Loaded inbound containers arriving at Port of Oakland plunged to 69,463 20-foot equivalent units, or TEUs. That is 27% less than both the prior month and same month a year earlier, and the least busy July for imports since 2009. At Long Beach, the country's busiest biggest location after Los Angeles, laden inbound shipments fell to 376,175 TEUs — the smallest amount this year and the quietest July since 2019. U.S. ports will see less retail cargo entering the country in the second half of the year as economic growth slows amid back-to-back interest-rate increases and persistent inflation, the National Retail Federation said last week.

     ports watch

U.S. freight demand is slipping heading into the critical fourth quarter. Recent industry measures and comments from trucking executives suggest that shipping volumes are softening from last year’s urgent demand. The Wall Street Journal reports (link) that freight rates are also pulling back from historic highs as domestic operations grow less strained and the capacity constraints of the past two years recede. The broad Cass Freight Index last month reached its lowest point since April and freight rail shipments appear to be sputtering. The pullback comes as a pivot in consumer spending toward services looks to be in full swing, leaving retailers weighed down by excess inventory. Trucking executives note shipment volumes remain strong by historical standards and say business is moderating after a period of rapid growth. They just need shipping demand to build back up to its usual fall peak. “We’re not sure if it’s recessionary or if it’s just, we’re getting back to a place of more normal distribution,” said C.H. Robinson CEO Bob Biesterfeld, on moderating freight demand.

     More facts and figures: 230,177 is the number of truck trailers moving in North American intermodal rail networks in the second quarter, a 25.2% decline from the previous year, according to the Intermodal Association of North America.

     Cass update

U.S. housing recession? Homebuilder sentiment fell into negative territory this month, according to the National Association of Home Builders/Wells Fargo Housing Market Index. Other than a brief moment in the early days of the Covid pandemic, it’s the first time that’s happened since 2014. “Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession,” said Robert Dietz, the chief economist for the NAHB. Mortgage rates have declined from recent highs but are still nearly double what they were at the beginning of the year. Home prices are still rising, too, and supply remains tight.

     Outlook: Nuveen’s chief investment officer Saira Malik anticipates “neither a bubble nor bottom” for the market, but says defense is the smartest play right now when to comes to this market. “Deteriorating home builder and consumer sentiment, higher mortgage rates, historically low affordability, declines in housing starts and building permits, and record-low inventories of existing homes for sale, among other factors,” will have implications for the housing sector and broader economy, Malik wrote in a commentary Monday. “But in our view they’re not evidence of a housing bubble that’s due to burst” with demand still healthy, she said.

     NAHB update

Market perspectives:

     • Outside markets: The U.S. dollar index is higher in early U.S. trading. The yield on the 10-year U.S. Treasury note is fetching 2.802%. Brent crude futures tumbled to less than $93 a barrel amid expectations of rising supply and waning demand from China. Prices have since rallied: U.S. is around $90.30 and Brent around $95.60. Gold and silver are under pressure, with gold around $1,791 per troy ounce and silver around $20.07 per troy ounce.

     • European natural gas prices continue to hit new heights, as expectations of a winter fuel crisis grow. Benchmark European natural gas prices jumped above €230 per megawatt hour.

    • Egg prices are coming down. Midwest large eggs, the benchmark for commodity price, closed at $2.16 a dozen on Friday, down about 37% from late July’s record high, according to commodity researcher Urner Barry. That will provide relief for consumers, who saw egg prices jump 47% at U.S. grocery stores last month during the worst period of food inflation since 1979. Retail rates generally follow commodity prices, so consumers should see a “significant” drop by more than a dollar per dozen in the next 30 days, said John Brunnquell, chief executive officer of Egg Innovations, one of the biggest U.S. producers of free-range eggs. Link for more via Bloomberg.

     • Water cuts may be announced for states that rely on the Colorado River amid drought. The Associated Press reports the federal gov’t today is expected to announce water cuts to states that rely on the Colorado River as drought and climate change leave less water flowing through the river and deplete the reservoirs that store it. The Colorado River provides water to 40 million people across seven states in the American West as well as Mexico and helps feed an agricultural industry valued at $15 billion a year. Water officials in Arizona, California, Colorado, Nevada, New Mexico, Utah and Wyoming are expecting federal officials to project Lake Mead — located on the Nevada-Arizona border and the largest manmade reservoir in the U.S. — to shrink to dangerously low levels that could disrupt water delivery and hydropower production and cut the amount of water allocated to Arizona and Nevada, as well as Mexico. Officials from the states are also scrambling to meet a deadline imposed by the U.S. Bureau of Reclamation to slash their water use by at least 15% to keep water levels at the river's storage reservoirs from dropping even more.

     • NWS weather: There is a Slight Risk of excessive rainfall over parts of the Central/Southern Rockies, Great Basin, and Southwest through Wednesday morning... ...There is a Slight Risk of excessive rainfall over parts of southwestern Texas and the Middle Mississippi Valley through Wednesday morning... ...There is a Slight Risk of excessive rainfall over parts of the Southern Rockies and Southwest from Wednesday into Thursday morning... ...There is a Heat Advisory over parts of the Southern Plains/Lower Mississippi Valley on Monday and an Excessive Heat Watch over parts of the West Coast on Tuesday.

        NWS 081622

Items in Pro Farmer's First Thing Today include:

     • Followthrough selling overnight
     • Consultant cuts corn yield, harvested acres
     • Corn and bean CCI ratings decline, spring wheat crop inches higher
     • More grain shipments leave Ukrainian ports (details in Russia/Ukraine section)
     • SovEcon sharply raises Russian wheat crop estimate
     • China to boost economic support for flagging economy
     • Limited retailer demand for beef
     • Strong day for wholesale pork trade

 

RUSSIA/UKRAINE

— Summary: Ukrainian President Volodymyr Zelenskyy called on the world to introduce tough sanctions in response to Russia's increased shelling around Ukraine's Zaporizhzhia Nuclear Power Plant. "Any radiation incident at the Zaporizhzhia NPP can be a blow to the countries of the European Union, and to Turkey, and to Georgia, and to countries from more distant regions," Zelensky said Monday. Meanwhile, Russia's defense minister said today that the advanced U.S.-supplied arms to Ukraine are not having a "significant impact" on the war. Ukrainian officials, however, have previously said these arms and other multiple rocket systems are "affecting the course of the war" — a view shared by top U.S. military personnel and diplomatic officials.

  • Ukraine again says Russia is stealing “millions of tonnes” of grain from areas of Ukraine that it currently occupies. Ukraine Agriculture Minister Mykola Solskyi in a television interview said that grain and oilseed production in the Ukrainian regions currently occupied by Russian forces totaled about 20 million tonnes in 2021. Harvest is now taking place and Solskyi noted it appears Russia is absconding with Ukrainian grain. “We can predict, by analyzing the information, the volume of crimes,” Solskyi. “The volume of abuse of the new crop is calculated in millions of tons.”
  • More grain shipments leave Ukrainian ports. Five more ships have left Ukrainian ports carrying corn and wheat, three from Chornomorsk and two from Pivdennyi, Turkey’s defense ministry said on Tuesday. Four more ships bound for Ukraine were to be inspected in Istanbul on Tuesday. Ukraine could export 3 MMT of grain from its ports in September and may in the future be able to export 4 MMT from them monthly, Deputy Infrastructure Minister Yuriy Vaskov said. He said the country had received applications for 30 ships to come to Ukraine in the next two weeks to export grain.

    Link to USDA circular on the Ukraine grain situation.

 

POLICY UPDATE

— ERP payments at 6.37 billion as of Aug. 14. Payments under the Emergency Relief Program (ERP) as of August 14, total $6.37 billion paid out with 261,017 applications approved. The total includes $5.55 billion for non-specialty crops and $824.1 million for specialty crops. North Dakota still leads with $1.01 billion paid out for eligible losses in 2020 and 2021, followed by Texas at $786.3 million. By crop, there have been $1.94 billion in payments for corn. $1.09 billion for soybeans, $920.6 million for wheat, and $636.9 million for cotton.

— USDA unveils nutrient management initiative. USDA will direct additional funds toward voluntary nutrient management projects on the farm and streamline the process of applying for funding. USDA Secretary Tom Vilsack said nutrient management would "help farmers address local resource concerns and global food security issues while also improving their bottom line." The Natural Resources Conservation Service also announced a streamlined funding opportunity for up to $40 million in nutrient management grants through the Regional Conservation Partnership Program. USDA also announced an outreach campaign focused on the benefits of nutrient management. It said farmers could save an average of $30 per acre through steps such as reducing nitrogen loss and minimizing nutrient runoff.

 

CHINA UPDATE

— What would a Chinese blockade of Taiwan mean for global business? Beijing claims Taiwan as part of its territory and has vowed to take control of it, by force if necessary. A Chinese blockade would cripple global supply chains and raise freight prices in Asia and potentially beyond, because of the outsize role that the island of roughly 23 million people plays in global business, the Wall Street Journal reports (link). Taiwan accounts for roughly 70% of the world’s microchip supply. It serves as an important part of the production chain for goods including smartphones, computers and cars. And it sits next to Pacific shipping lanes that channel trillions of dollars worth of trade flowing in and out of East Asia.

     Chips dominant

— ‘Held accountable for life’: China sanctions Taiwan officials after Pelosi trip. Mainland’s Taiwan Affairs Office accuses seven, including six DPP members, of being pro-independence provocateurs. Link for details via the South China Morning Post.

— The U.S. approves nearly all technology exports to China, which it has identified as a top national-security threat. A Commerce Department-led process that reviews U.S. tech exports to China has even overseen an increase in sales of some particularly important technologies, according to an analysis of trade data. Critics say Commerce officials are improperly giving priority to U.S. commercial interests over national security and that a regulatory revamp is necessary. Bottom line: >0.5% is the share of the U.S.’s total $125 billion in exports to China in 2020 that required a license, Commerce Department data shows.

— The National Health Commission is concerned about China’s shrinking, aging population. “[We should] stick to bottom-line thinking and stay conscious of the fact that population is a key variable affecting socio-economic development,” a report said. Some local governments are trying to do their part. Since last year, multiple local governments have announced plans to ease the financial burden of raising kids.

 

TRADE POLICY

— Rep. Neal working on TAA reauthorization. House Ways and Means Committee Chairman Richard Neal (D-Mass.) is working on getting the lapsed Trade Adjustment Assistance (TAA) program reauthorized after it failed to be included in either the CHIPS bill or the reconciliation package. Neal, according to Congressional Quarterly, wants TAA operations to be improved, including better accountability and administering of the program. The TAA language could likely end up on a must-pass late-session funding measure.

 

ENERGY & CLIMATE CHANGE

— Even with biggest-ever climate bill, U.S. lags China’s green spending. $374 billion is a lot of money. But China and the EU are spending as much or more on the transition away from fossil fuels. Link for details via Bloomberg.

— Federal Transit Administration awarded $1.6 billion in funding that will be used to purchase about 1,800 buses, including 1,100 emissions-free buses, to help transit agencies speed up a transition from diesel buses to battery- or hydrogen-powered fleets. The funding from the $1 trillion infrastructure package will span 150 projects in 48 states with four more rounds of funding set to be distributed in the coming years. Link to WaPo article.

— Judge orders Iowa agency to release list of landowners in pipeline path. An Iowa District Court judge ruled Monday that the Iowa Utilities Board must make the list of landowners likely to be affected by the Summit Carbon Solutions carbon dioxide pipeline available to the public within 14 days. The Iowa-based company wants to build a 2,000-mile pipeline to take carbon dioxide off the stacks of ethanol plants and transport it to North Dakota, where it would be stored permanently underground. Some 60% of affected landowners have refused to grant Summit pipeline easements. Link to Des Moines Register article.

 

LIVESTOCK, FOOD & BEVERAGE INDUSTRY

— Advocates say that the emphasis on cow’s milk in American school lunches represents “dietary racism” given the prevalence of lactose intolerance among children of color, and they are pressing USDA to change its policies, according to The Hill (link).

— Where’s the long-delayed Cattle Price Discovery and Transparency Act action in the Senate? Sen. Chuck Grassley (R-Iowa) says the legislation is out of committee and on the Senate calendar. While optimistic the bill will receive support, Grassley adds he’s not confident Senate Majority Leader Chuck Schumer (D-N.Y.) will add it to the agenda. Grassley made the comments in a meeting at the Iowa State Fair Monday morning.

— USDA seeking comments on information collection required under proposed regulations for poultry. USDA is proposing new regulations under the Packers and Stockyards Act to clarify rules under the law relative to poultry dealers. USDA’s Agricultural Marketing Service wants comments on the scope of information that would be required of live poultry dealers on “certain disclosures to poultry growers in advance of entering into production contracts.” AMS is proposing that live dealers could use the USDA Live Poultry Dealer Disclosure Form or they could develop their own cover page to meet the requirement.” AMS estimates it would impact 89 businesses due to the annual reporting requirements. Link to notice with a 30-day comment period.

 

CORONAVIRUS UPDATE

Summary:

  • Global Covid-19 cases at 591,230,057 with 6,438,036 deaths.
  • U.S. case count is at 93,026,756 with 1,037,462 deaths.
  • Johns Hopkins University Coronavirus Resource Center says there have been 606,162,842 doses administered, 223,457,170 have been fully vaccinated, or 67.82% of the U.S. population.

— U.K. regulators were the first in the world to approve an updated Moderna Covid-19 booster shot combining the company’s original mRNA-based vaccine with one targeting the Omicron variant. Moderna is preparing a different booster for the U.S. this fall, targeting the BA.4/BA.5 subvariants of Omicron, which have both spread rapidly in recent months, according to the latest Centers for Disease Control and Prevention estimates.

— Pfizer CEO Albert Bourla said in a series of tweets that he had tested positive for Covid-19 and was “experiencing very mild symptoms,” but expected a speedy recovery. Bourla, who has received four doses of Pfizer-BioNTech’s vaccine, has started his company’s Paxlovid antiviral treatment.

 

POLITICS & ELECTIONS

Tuesday primary focus: Liz Cheney is nearly certain to lose today's GOP primary in Wyoming to Trump-backed Harriet Hageman, who leads the incumbent by nearly 30 points in the latest polling. Another in Alaska will offer a tableau of Trump’s clout as Lisa Murkowski, who voted to convict Trump in his Senate trial, and Sarah Palin are on the ballot.

— Donald Trump's claim to have verbally declassified the records the FBI seized from his Mar-a-Lago compound may have a precedent: The Scooter Libby case under George W. Bush showed that presidents can declassify materials without a clear paper trail. Link for more via Politico.

— Senate Majority Leader Chuck Schumer of New York is endorsing Democratic Rep. Jerry Nadler in his primary contest with Carolyn Maloney, another long-serving New York House member.

— Rudy Giuliani is a target of a Georgia grand jury probe into election interference as part of an investigation into former President Donald Trump's post-election conduct. A federal judge also ruled that Sen. Lindsey Graham (R-S.C.) must appear before the jury, throwing to the wind his argument that being a senator should exempt him.

 

OTHER ITEMS OF NOTE

Record numbers of migrants are being arrested while crossing the southern U.S. border with Mexico, a sustained surge of single men and families from across Latin America either seeking asylum or work, according to new figures Monday from U.S. Customs and Border Protection. Border Patrol agents have made about 1.82 million arrests at the southern border so far in the government’s fiscal year, which runs from October to the end of September. The number beats the record set last fiscal year, which was 1.66 million apprehensions in the year ending September 2021. With about two months left in the agency’s fiscal year, full-year arrests are expected to break the two million mark for the first time.

     Migrants

— The U.S. won't release any of the roughly $7 billion in foreign funds held by Afghanistan's central bank, the WSJ reports. The House is likely to launch investigations in the U.S. withdrawal from Afghanistan if the GOP retakes the chamber in November. A draft report by top Republicans on the House Foreign Affairs Committee, planned for release this week to mark the one-year anniversary of the Taliban takeover of Kabul, lays out questions the GOP leadership says have gone unanswered by the State Department. Meanwhile, the Biden administration suspended talks with the Taliban over the funds after the killing of al Qaeda’s leader in Kabul, according to U.S. officials.


 

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