Russia Pulls Back Some Troops Around Ukraine but U.S. Official Tempers De-escalation

Senate Republicans focus on Biden administration vaccine mandate

           Abbreviated report today because I am going to the Univ. of Arkansas.

• U.S. equities yesterday: All three major indices finished lower, with the Dow unable to break into positive territory during the trading session. The Dow ended down 171.89 points, 0.49%, at 34,566.17. The Nasdaq eased 0.24 point, 0.00%, at 13,790.92. The S&P 500 fell 16.97 points, 0.38%, at 4,401.67.
   
• PPI: The Labor Department today is expected to report producer price index (PPI) for final demand increased 0.5% in January, after posting a rise of 0.2% in December. In the 12 months through January, the PPI likely rose 9.1%. Excluding the volatile food, energy and trade services components, producer prices likely rose 0.5% in January, matching December's increase. In the 12 months through January, the core PPI is expected to have gained 7.9%.
   
• The New York Federal Reserve will report its "Empire State" index on current business conditions likely advanced to a reading of 12.15 in February from -0.7 last month.
   
• Inflation outlook improves for first time since 2020. U.S. consumers don’t expect red-hot inflation levels to last in the long term, according to the January consumer survey from the Federal Reserve Bank of New York, which showed that median one-year-ahead inflation expectations fell for the first time since October 2020, to 5.8%. The outlook over three years decreased even more sharply, and the decline was broad-based across age, education and income. In a separate analysis of data from the survey, economists said consumers recognize the unusual nature of the current bout of high inflation.
• Russia/Ukraine update. Russia said some troops were being pulled back from around Ukraine, a sign of potential de-escalation. But large-scale drills are continuing. The Defense Ministry’s announcement could be a sign Russia might be trying to de-escalate the military standoff on the Ukrainian border. But the U.S. tempered hopes that Moscow wanted to find a diplomatic route out of the Ukraine crisis as officials warned that Russia’s military had in the past two days continued to ramp up plans for an invasion.
  
  Meanwhile, Sergei Lavrov, Russia’s foreign minister, raised expectations on Monday that the stand-off might be resolved peacefully when he said Moscow was prepared to keep talking to the west about its security concerns and that there could still be a “way forward” in negotiations. But officials in Washington said Lavrov’s comments, which were made in a televised meeting with Vladimir Putin, Russia’s president, were at odds with advancing military preparations for an assault. “We have taken note of his comments. What we have not taken note of is any indication of de-escalation. We have not seen any tangible, any real sign of de-escalation,” said Ned Price, U.S. State Dept. spokesperson, on Monday.
   
• The crop insurance price guarantee for corn in 2022 may be $5.80 per bushel and the guarantee for soybeans may be $14.11, said USDA Chief Economist Seth Meyer at the Crop Insurance Convention.  He said the higher price reflects continued high demand for commodities and factors that USDA uses to determine the crop insurance election price.
  
  Says one crop insurance analyst: “PLC and ARC are not likely to pay out despite high input costs that are hurting producers despite higher prices. SCO, ECO, and STAX are more likely to pay out because their price election is based on higher prices. Hence, they present an opportunity for growers. Yes, on the downside, they are area approaches to insurance. So, if you have the means, you might be better off just buying higher personal coverage. But if you don’t have the means, these coverages provide greater level of coverage despite the county trigger for SCO which is not an option if a producer chose ARC.”
   
• Senate Republicans focus on Biden administration vaccine mandate. Sens. Mike Lee (R-Utah), Roger Marshall (R-Kan.), Cynthia Lummis (R-Wyo.), Mike Braun (R-Ind.), Rand Paul (R-Ky.) and Ted Cruz (R-Texas) sent out a “Dear Colleague” letter suggesting that they won’t sign on to a time agreement to pass the fiscal year 2022 government funding bill quickly unless the legislation also strips money for the Biden administration’s implementation of a vaccine mandate for the military, medical workers, federal employees and contractors. The letter indicates that the GOP senators would settle for an amendment vote calling for defunding of the mandate — like they did previously when they raised this threat.
  
  Comments: With the House out of town until Feb. 28 and the current continuing resolution expiring Feb. 18, history suggests this issue will be handled sans House action.
• U.S. Senate Banking Committee is expected to vote on Federal Reserve nominees Jerome Powell, Lael Brainard, Lisa Cook, Philip Jefferson and Sarah Bloom Raskin.
• USDA sends new poultry contracting rules for review. USDA moved toward publishing a proposed new rule regulating “tournament systems” heavily used by poultry companies to pay growers, sending the rule to the White House’s Office of Management and Budget. The proposal would be first in a series of proposed USDA rules to address the White House’s goal of more competition in the livestock and poultry processing industries. Advocates of poultry growers have complained that the ranking system poultry firms often use to compensate farmers is opaque and unfair.  
• USDA confirms HPAI in commercial Kentucky broiler flock, Virginia backyard flock. USDA’s Animal and Plant Health Inspection Service (APHIS) has confirmed the presence of highly pathogenic avian influenza (HPAI) in a commercial broiler flock in Fulton County, Kentucky and a backyard flock of mixed species in Fauquier County, Virginia. Results from a second Kentucky turkey farm in Webster County are awaited after the Breathitt Veterinary Center Laboratory had a “non-negative” avian influenza test. The two positive cases were confirmed at the APHIS National Veterinary Services Laboratories in Ames, Iowa—confirmation is pending for the Webster County, Kentucky case. The Kentucky Department of Agriculture has established a 10-kilometer surveillance zone around the Fulton County location which also includes Obion County, Tennessee as Fulton County, Kentucky is located on the Kentucky/Tennessee border. This could be an important aspect of the current HPAI find as Tennessee is a leader in primary breeders, with an estimated 50% of chicken consumed globally linked back to Tennessee primary breeder operations. There were already some trade restrictions emerging linked to the Kentucky case, but none listed as of yet for the Virginia find:

— Poultry/products from the county on or after the specified date: Jamaica (Feb. 12, includes Hickman County), Vietnam (Feb. 8).
— Poultry/products from a 10-kilometer radius as of the specified date: Egypt (Feb. 12), Mauritius (Jan. 22), Morocco (Jan. 22).
— From the state of Kentucky on or after the specified date: Benin (Jan. 22), China (Feb. 12), South Africa (Jan. 22), Tunisia (Feb. 12).

• Canada’s Trudeau invokes emergency powers to address trucker protests. Canada’s prime minister Justin Trudeau has invoked emergency powers to quell protests against mandatory Covid-19 vaccinations that continue to grip the nation’s capital, drawing the ire of some provincial leaders. Trudeau pledged at a press conference on Monday that use of the powers under the Emergencies Act — which gives the federal government broad authority, including the ability to prohibit public assembly and travel — “will be time-limited, geographically targeted, as well as reasonable and proportionate to the threats they are meant to address.” He also said the military would not be called in to deal with vehicle blockades that have cut off border crossings with the U.S. Financial institutions may be directed to regulate or ban “the use of property to fund or support illegal blockades,” the prime minister said.
• The Taliban “strongly” condemned the Biden administration’s “unjustified actions” to use the $7 billion of Afghanistan’s Central Bank reserves for compensating Sept. 11 victims and supporting aid efforts in the country as a “violation of the rights of all Afghans,” the militant group said. “In order to avoid international reproach and not to damage its relations with the Afghan people,” the U.S. “must relinquish its decision,” the Taliban said, demanding the assets be unfrozen unconditionally.