Karl Rove: 'This election result won’t be overturned'
In Today’s Updates
* Brent crude, WTI futures up 17% and 16%, respectively, in November so far
* OPEC made another cut to its demand estimate
* IEA damped its outlook for crude oil consumption
* Lagarde: EC policymakers will focus on emergency bond purchases, long-term loans
* Britain’s GDP grew by record 15.5% in three months ending September, but...
* Rubber market rally
* Consultancy expects EU soft wheat acres to rise notably amid improved weather
* South Korea likely to raise tariffs on Australian beef sometime next week
* Biden climate plan wants to tap USDA's CCC for carbon bank
* Revisiting WOTUS rule part of coming Biden administration regulatory agenda
* Rep. Fudge spells out her case to lead USDA
* Timber, natural gas latest to be caught up in Australia-China tensions: Reuters
* Alibaba made sales huge sales first day of Singles’ Day shopping event
* China new bank loans fall to lowest level in a year
* China pledges to speed spending of special funds to boost economy
U.S. food & beverage industry update:
* Global food supplies weather coronavirus pandemic
* Meat company sues to stay open after state-ordered closure due to Covid
* Texas first state with more than 1 million confirmed cases
* Iowa Gov. extended state's public-health disaster emergency for 30 days
* Moderna gets in the vaccine spotlight
* Biden coronavirus advisor talks lockdown
Politics & Elections:
* Karl Rove: 'This election result won’t be overturned'
* Biden names longtime adviser Ron Klain as White House chief of staff
* Biden's team developing gov't employment program: Public Health Jobs Corps
* Spending on elections: A graphic look
* Sabato's Crystal Ball comments on presidential election
* 2021 party control of senators by state
* WaPo: Runoffs never attract same intensity as the first round of voting
* Georgia will recount its presidential ballots by hand
* Still no daily policy briefings for Biden, but...
* Bloomberg: Ex-Google official seen as a Biden energy pick
Equities today: U.S, equity futures signal a lower open. Overnight, the MSCI Asia Pacific Index added 0.1% while Japan's Topix index closed 0.2% lower.
The Hang Seng Tech Index, which includes China’s largest internet stocks like Alibaba and Tencent, through Wednesday dropped more than 10% in two days. China’s antitrust watchdogs on Tuesday announced draft rules targeting monopolistic practices on the country’s digital platforms.
U.S. equities yesterday: The Dow edged down 23.29 points, 0.1%, to 29,397.63. The S&P 500 rose 27.13 points, 0.8%, to 3,572.66, off just 0.2% from its September record close. The Nasdaq advanced 232.57 points, 2%, to 11,786.43.
On tap today:
• U.S. jobless claims, due at 8:30 a.m. ET, are expected to fall to 740,000 in the week ended Nov. 7 from 751,000 a week earlier.
• U.S. consumer price index for October, due at 8:30 a.m. ET, is expected to increase 0.1% from a month earlier and 1.3% from a year earlier. Excluding food and energy, economists are forecasting a 0.2% monthly gain and a 1.7% annual gain.
• Federal Reserve Chairman Jerome Powell, European Central Bank President Christine Lagarde and Bank of England Gov. Andrew Bailey speak at an online ECB central-banking forum at 11:45 a.m. ET.
• Fed Vice Chairman Randal Quarles appears remotely before the House Financial Services Committee at 12 p.m. ET, Chicago's Charles Evans speaks at a virtual Detroit community forum at 1 p.m. ET, and New York’s John Williams speaks at a virtual Economic Club of New York event at 2 p.m. ET
• U.S. federal budget figures for October are out at 2 p.m.
ECB President Christine Lagarde said policymakers will focus on emergency bond purchases and long-term loans for their next wave of stimulus, effectively ruling out interest-rate cuts as a way to aid the economy. The ECB is widely predicted to increase and extend its 1.35 trillion-euro pandemic bond-buying program at its meeting in December, and many economists also expect it to make changes to its ultra-cheap credit for banks. The euro area’s economic outlook has damped in recent weeks as record-breaking coronavirus cases across the region have forced governments to reintroduce restrictions on activity.
U.K. economy grew by 15.5% in the third quarter, according to preliminary figures published today. Economists polled by Reuters had expected a 15.8% quarter-on-quarter expansion in GDP (gross domestic product) in the three months to September. It comes after an unprecedented 19.8% plunge in the previous quarter as nationwide lockdown measures crippled activity. The third-quarter bounce marks the U.K.’s sharpest quarterly expansion since records began in 1955, but GDP is still 9.7% below where it was at the end of 2019, the Office for National Statistics said Thursday. Compared with the third quarter of last year, GDP fell 9.6%. With England now in a month-long partial lockdown until at least December 2 amid a resurgence in coronavirus cases, the recovery is expected to lose steam in the final three months of the year.
• Outside markets: U.S. Treasury bond and note yields have risen to eight-month highs this week, on the prospects for a solid U.S. economic recovery in the second half of 2021. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.94%. The U.S. dollar index is weaker early today. The other important outside market sees crude oil prices slightly higher and trading around $41.50 a barrel.
• Brent crude and West Texas Intermediate futures are up 17% and 16%, respectively, in November so far. Oil prices have shot up this week in the wake of positive news around a potential coronavirus vaccine.
• Crude futures have moved lower as Covid worries are creeping back into market focus and traders await US government inventory data that was delayed a day by Wednesday’s U.S. holiday. U.S. crude is trading around $41.25 per barrel and Brent around $4360 per barrel, both around 0.5% under their Wednesday finishes. Crude oil prices had moved slightly higher in Asian trade, with U.S. crude up 19 cents at $41.64 per barrel and Brent crude up 17 cents at $43.97 per barrel.
• OPEC made another cut to its demand estimate, expecting the pandemic's effect on oil consumption to last into next year even with the announcement of a vaccine breakthrough. OPEC and its allies including Russia are likely to delay an increase to production rates that was set for January.
• International Energy Agency dampened its outlook for crude oil consumption in the months ahead, citing resurgent Covid-19 infection rates in the U.S. and Europe. It now expects demand for 2020 to fall by 8.8 million barrels a day this year — 400,000 barrels a day more than its last forecast. The agency also slashed its demand forecasts for the third and fourth quarters of 2020 as well as the first quarter of 2021. It doesn't expect a Covid-19 vaccination to significantly affect global demand in the first half of 2021.
• Rebound in auto production in China and increased demand for medical gloves have sent prices for rubber soaring, making it one of the best-performing commodities in the world in recent months, the Wall Street Journal reports (link). The prices for a variety of natural rubber used to manufacture tires have jumped almost 50% from their 2020 low in Singapore, one of three Asian trading hubs for the material.
Items in Pro Farmer's First Thing Today include (Link to subscribe to FTT):
• Consultancy expects EU soft wheat acres to rise notably amid improved weather
• South Korea likely to raise tariffs on Australian beef sometime next week
— Biden will go all out on implementing a climate change program as much as possible administratively, including tapping USDA's Commodity Credit Corporation (CCC). That's according to the Washington Post, which reports (link) that a Biden administration wants to “embed action on climate change across the breadth of the federal government, from the departments of Agriculture to Treasury to State — expanding it beyond environmental agencies” to accelerate U.S. efforts to mitigate global warming.
The recommendations for administrative action come in a 300-page Climate 21 Project report (link) that took 18 months to develop. It was delivered recently to Biden's transition team.
The report suggests:
• Creating a White House National Climate Council that is “co-equal” to the Domestic Policy Council and National Economic Council;
• Establishing a “carbon bank” under USDA's CCC that could pay farmers and forest owners to store carbon in their soils and lands (the report says (link) USDA has “enormous and under-appreciated discretionary financial resources and agency expertise” to address climate issues; see more on this below);
• Electrifying cars and trucks via the Transportation Department; and
• Developing a climate policy at the Treasury Dept. that promotes carbon reductions through tax, budget and regulatory policies.
Robert Bonnie, who leads the Biden transition advisory team for USDA, was a Climate 21 Project member and served as undersecretary of natural resources at USDA during the Obama administration. Bonnie has called for buying ag carbon credits via a reverse auction that would allow farmers, ranchers and forest owners to bid the price at which they are willing to sell offsets. The credits would then be sold into the private market. Bonnie previously said Congress could authorize USDA to “buy, insure, and/or provide price guarantees for carbon credits.” Robert Bonnie was one of the three lead authors on the chapter for USDA.
The Climate 21 report states, "USDA can establish a carbon bank through administrative action by using existing authorities under the Commodity Credit Corporation (CCC), which has broad authorization to support, stabilize and protect farm income and prices and to support conservation, and which has been used in similarly innovative ways in the past." The report indicates congressional action would come in the form of creating a national compliance market for carbon offsets, additional legislative authority will be required to allow the USDA carbon bank to sell purchased carbon credits into that market."
But it also notes the following: " The intent to create a carbon bank could be announced in the first 100 days through the FY21 budget or separately. USDA should work with OMB to secure approval for using the CCC to create a carbon bank."
Comments: The key part in tapping USDA's CCC for a carbon bank is getting congressional approval, unless Biden administration lawyers see wiggle room in the CCC Charter Act. But the need for congressional authority sounds similar to the efforts by ethanol industry supporters to use CCC to provide aid to that sector, a development that has still not occurred.
— Revisiting Waters of the United States (WOTUS) rule is part of coming Biden administration regulatory agenda, according to an analysis by Hogan Lovells (link). It says under the Clean Water Act, there is federal jurisdiction over “waters of the U.S.” The Obama administration had issued a revision to WOTUS in 2015, which was the subject of extensive litigation. The Trump administration issued a repeal and revision of the Obama era rule, which has also drawn litigation for removing groundwater, ephemeral and intermittent streams, and certain agricultural operations from federal oversight. “The Biden administration will likely repeal the Trump regulation, but may modify the 2015 approach to stave off litigation exposure or seek a bipartisan solution in Congress,” the report says.
— Rep. Fudge spells out her case to lead USDA. Rep. Marcia Fudge (D-Ohio) says she is a “natural fit” to lead USDA, telling Politico in an interview, "We need to start to look outside of the box and, as they have promised, a cabinet that is representative of this country as well as representative of the people who have supported them," Fudge added. The pointed to the support for the Biden-Harris ticket from African American women as another factor as “a major part of the reason that this Biden-Harris team won was because of African American women.” Her comment on looking “outside the box” comes as Black politicians are usually picked for certain agencies. “As this country becomes more and more diverse, we're going to have to stop looking at only certain agencies as those that people like me fit in. You know, it's always ‘we want to put the Black person in labor or HUD,'" she said. On the House Ag Committee, she chairs the Nutrition, Oversight and Department Operations. And was previously a chair of the Congressional Black Caucus. She also backed Kamala Harris during the Democratic primaries and worked to help Biden after Harris dropped out of the race.
“I do know there are many people who are lobbying. My name was mentioned even before the election,” Fudge said. “I’ve been very, very loyal to the ticket and I will remain loyal to the ticket.” While her background on nutrition programs is clear, some may be wary of her when it comes to farm programs and other production-related programs at USDA. But she insists she has the backing of some ag groups. “I do believe that because of my work with some of the other ag groups, my being from Ohio — where ag is huge — I think [winning support] is not going to be a problem,” Fudge said.
Several candidates have been mentioned for the USDA post, including former Sen. Heidi Heitkamp (D-N.D.), but some believe she would be too moderate for the position. Another possibility is defeated Rep. Collin Peterson (D-Minn.), the Chairman of the House Ag Committee, but some also believe he may be too moderate to win the support of progressives in the Democratic party to head USDA. Some also question if Peterson would want to take on that role. And there is still the possibility that another candidate will emerge that would take the post, must as that of then-Rep. Mike Espy (D-Miss.) who was not on the radar but eventually was picked to lead USDA under the early years of the Clinton administration.
— Update on China:
- Timber, natural gas latest to be caught up in Australia-China tensions: Reuters. Woodside Petroleum has put talks on hold to sell stakes in an Australian natural gas field and liquefied natural gas (LNG) project with Chinese firms due to the diplomatic tensions between the two countries, according to the head of the firm in comments to Reuters. Talks were halted a few months ago but had been hoped to resume, Peter Coleman told the news service. “They advised us a couple months ag that they were just not able to proceed at this point due to the relations between China and Australia,” he said. Talks had been underway with PetroChina and second-tier firms for the sale of a stake in the linked Scarborough gas field and Pluto LNG Train 2 project that would have included gas sales. However, Coleman insisted that the tensions have not currently impacted existing partnerships with Chinese firms. Australia accounted for 40% of China’s September LNG imports.
Meanwhile, China has now suspended imports of all timber from Australia’s Victoria state after China’s General Administration of Customs said they found pests in shipments, and Australia’s Agriculture Minister David Littleproud said the country was informed that “all export of logs from the state of Victoria are suspended as of 11 November.” A Chinese Foreign Ministry spokesman, Wang Wenbin, confirmed the situation at a briefing. “If the insects enter China, it will cause severe harm to Chinese agriculture production and ecological security,” he said. China last week halted timber imports from Queensland and a Reuters report said, “Chinese importers told media they had been called to a meeting and informally told by officials that Australian products would face increased customs inspections after November 6.” China continues to deny that there has been any concerted effort by the Chinese government affect business ties with China, but the continued Chinese actions to halt imports of various Australian products are seen by some in Australia are making those statements difficult for some to believe.
- Alibaba said it made sales of $70.6 billion by the evening of the first day of its Singles’ Day shopping event, which this year will last four days. In spite of the positive news from the e-commerce giant, shares in many Chinese tech companies, including Alibaba, fell after regulators in China signaled plans to clamp down on anti-competitive behavior by fintech firms.
- China new bank loans fall to lowest level in a year. New yuan loans issued in October in China totaled 689.9 billion yuan ($104.22 billion), according to the People’s Bank of China, down from 1.9 trillion yuan in September and below subdued expectations the total would be 800 billion yuan. But despite the low October total, the PBOC has issued 16.95 trillion yuan in new loans so far in 2020, well above the 16.81 trillion yuan total for all of 2019. Outstanding yuan loans grew 12.9% compared with year ago in October, near the 13.0% level seen in September. Some believe the annualized figures provide a more-accurate picture of underlying trends. China has clearly put a focus on lending as it seeks to spur the country's economy as it recovers from the Covid pandemic.
- China pledges to speed spending of special funds to boost economy. Spending of funds provided to local governments to boost the Chinese economy will be accelerated, according to statements made by Vice Finance Minister Xu Hongcai. Through October, China spent 1.198 trillion yuan ($180.7 billion), or 70.9% of special funds allocated from the Chinese government, Xu said. "The move has effectively enhanced the grass-roots units' financing capacity, strongly supported the epidemic prevention and control, economic and social development and poverty alleviation," Xu said. Another official from the ministry, Hao Lei, said at the briefing that some local governments had difficulty finding eligible projects, but those problems had mostly been resolved. China announced it would provide special transfer payments of 2 trillion yuan from special treasury bonds, including 1.7 trillion for local governments.
- U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.
— Food and beverage industry update:
- Global food supplies weather coronavirus pandemic. Food supplies have held up during the coronavirus pandemic, defying warnings from economists that rising protectionist policies and disruptions at ports and to truck routes would lead to global shortages. Link for details via the WSJ.
- Meat company sues to stay open after state-ordered closure due to Covid. Stampede Meat has filed suit to block an order by the state of New Mexico to close a production facility where more than 100 workers have tested positive for Covid-19. The company supplies to Walmart and Costco and is arguing it should stay open under the executive order issued by President Donald Trump in April that ordered meat plants to stay open to protect the U.s. food supply.
New Mexico last week ordered Stampede Meat to shut for 14 days after identifying six COVID-19 cases at the plant during a five-day period in late October. But the closure is unconstitutional and could force the company to destroy millions of pounds of meat destined for grocers and food service customers like Denny’s and Applebee’s, the company said. “Allowing the Department of Health to ignore the President's Executive Order and close Stampede Meat and other meat and poultry processing companies will lead to similar food shortages and rationing," the lawsuit said.
According to Reuters, a spokeswoman for New Mexico’s health department said they were unaware that Stampede had halted operations and that at least 11 workers tested positive over two weeks when the state ordered the shutdown and more than 100 employees have tested positive during the pandemic.
Stampede also reached out to USDA and a department spokesman said the agency offered to help New Mexico manage the pandemic and ensure food supplies. It is not clear what the court will rule, but this will be closely followed in the industry.
— Coronavirus update:
- Summary: Global cases of Covid-19 are at 52,178,723 with 1,285,709 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The US case count is at 10,402,274 with 241,808 deaths.
Link to Covid Case Tracker
Link to Our World in Data
- Texas became the first state with more than 1 million confirmed cases, and California closed in on that mark. In New York, Democratic Gov. Andrew Cuomo said all restaurants, bars and gyms statewide will have to close at 10 p.m. starting Friday, a major retreat in a corner of the U.S. that had previously brought the virus largely under control months ago.
- Iowa GOP Gov. Kim Reynolds extended the state's public-health disaster emergency for 30 days and put additional measures into place, including some mask mandates.
- Moderna gets in the vaccine spotlight. Two days after Pfizer announced encouraging results for its covid-19 vaccine, Moderna, a rival drugmaker, said it was on track to report early data from a late-stage trial of its rival vaccine later this month. Moderna began Phase 3 trials, the final stage before it can be approved for use, at the start of July.
- Biden coronavirus advisor talks lockdown. A four- to six-week lockdown could bring Covid-19 under control and get the U.S. economy back on track until a vaccine is approved and distributed, said Michael Osterholm, who is advising President-elect Joe Biden on the coronavirus. His plan, though, depends on the government coming up with another relief package. "We could pay for a package right now to cover all of the wages, lost wages for individual workers for losses to small companies to medium-sized companies or city, state, county governments," he declared, after warning earlier this week that the country was heading for "Covid hell."
POLITICS & ELECTIONS
- Karl Rove, in his Wall Street Journal column (link): "This election result won’t be overturned. Recounts occasionally change margins in the hundreds, never in the tens of thousands."
- President-elect Joe Biden names longtime adviser Ron Klain as White House chief of staff. “His deep, varied experience and capacity to work with people all across the political spectrum is precisely what I need in a White House chief of staff as we confront this moment of crisis and bring our country together again,” Biden said of Klain in a statement announcing the appointment. Klain called the appointment “the honor of a lifetime.” Klain twice served as chief of staff to vice presidents -- Biden at the beginning of the Obama presidency and Al Gore at the end of Bill Clinton’s administration. He also has experience on Capitol Hill. His relationship with Biden goes back more than three decades, to his first, short-lived 1987 presidential campaign, and he was chief counsel to the Senate Judiciary Committee when Biden was the committee chair. He’s also been a key campaign adviser, on the coronavirus and in preparing Biden for his campaign debates. Klain served as the coordinator to the Ebola response in 2014.
Klain’s part in the contested presidential election of 2000 was played by Kevin Spacey in “Recount,” a Hollywood film.
- Biden's team is developing a government employment program — called the Public Health Jobs Corps — that would put 100,000 Americans to work on virus testing and contact tracing, the New York Times reports.
- Spending on elections: A graphic look from Republican lobbyist Bruce Mehlman:
- Sabato's Crystal Ball on the presidential election: “Biden’s victory belongs to his narrow margins in just Arizona, Georgia, and Wisconsin — a combined 47,000 votes or so as of Wednesday morning. Flip these states to Trump, and there is a 269-269 tie that Trump likely wins in the House. By that token, Biden’s victory in 2020 was even smaller than Trump’s in 2016, even though Biden will easily win the popular vote after Trump lost it by two points.
- 2021 party control of senators by state:
Says Sabato's Crystal Ball: “Only six states have a split Senate delegation; that number could increase with the Georgia runoffs if voters render a split verdict in those races (typically, though, when two Senate races are on the ballot at the same time, the same party sweeps both races).”
Regarding Georgia, a Washington Post item notes: “History has shown runoffs never attract the same intensity as the first round of voting. In 2008, as Barack Obama won re-election and lost Georgia, almost 3.8 million votes were cast in the first round of voting. When a December runoff arrived, 2,1 million voters showed up, a 55% drop-off. But among Republicans, the drop-off was just 41% to Democrats’ 63%. Republicans came back while Democrats did not. There have been seven statewide runoffs in Georgia since 1988; Democrats have won just one. An engaged Trump may keep Georgia Republicans on the field.”
- Georgia will recount its presidential ballots by hand, as the Trump campaign requested. Officials said it was unlikely to erase Biden’s 14,000-vote lead.
- Still no daily policy briefings for Biden, but... Sen. James Lankford, an Oklahoma Republican who sits on a key Senate oversight committee, says he will “step in” if Biden doesn’t start receiving daily policy briefings by the end of the week.
- Bloomberg: Ex-Google official seen as a Biden energy pick. A former Google executive who previously led an Energy Department unit that funded research into experimental power projects is among the front-runners to lead the agency under President-elect Joe Biden, Bloomberg reported, citing two people familiar with the matter. Arun Majumdar, a Stanford University engineering professor who was named Tuesday to lead the Biden transition team for the agency, is on the short-list to be its top official, the people said. “He has to be the front-runner if Joe Biden is looking for a politically savvy technical expert to lead the agency,” said Jeff Navin, a co-founder and partner at Boundary Stone Partners, a Washington-based government affairs and communications firm, according to Bloomberg.