No major movement on new aid negotiations | CFAP payouts over $7 billion
In Today’s Updates
* CBO: Budget gap last month totaled $61 bil. vs $120 bil. in July 2019
* Sharp decline in tourism disastrous for some emerging-market economies
* Powerful storms raged across Iowa and northern Illinois on Monday
* Imports at major retail container ports at lowest annual total in four years
* CFAP payments just over $7 billion
* Hoyer signals House to vote in September to keep gov't operating
* White House officials & Democratic leaders urged each other to return to aid talks
* Sen. Sasse joins Dems in denouncing executive actions by Trump
* Gov't spent almost $250 billion on enhanced unemployment benefits
* Flooding forces gov't to release stocks and buy U.S. food produce
* China in delicate balancing act as it keeps Phase 1 trade deal alive
* Beijing will honor Phase 1 deal by opening financial sector wider: central bank chief
* Impacts for companies that do not comply with accounting standards
U.S. food & beverage industry update:
* CDC report focuses on why so many Smithfield employees got Covid-19
* Shortages in grocery aisles have eased but they haven’t gone away
* Online campaign will seek to limit market power of online food delivery apps
* McDonald’s is suing its former CEO Steve Easterbrook
* U.S. reports fewer than 50,000 new coronavirus cases for second consecutive day
* Russia registers world’s first Covid-19 vaccine
* White House mulls Covid-related border restrictions
Politics & Elections:
* GOP primary election in Minn. today to choose challenger to Collin Peterson
* Grassley blasts Democrat Greenfield in Iowa Senate race
* Joe Biden has completed vice-presidential interviews and dissolved vetting team
* Some speakers tapped for Democratic National Convention next week
Other Items of Note:
* Mexico objecting to U.S. interim rule that could restrict Mexican long-haul truckers
* Global trade in services to jump to $8 trillion by 2025 from $6.1 trillion in 2019
* Commerce announces preliminary aluminum duties
* ITC to continue countervailing duty investigation on fertilizer from Russia, Morocco
* EPA preparing rules that would rescind regulations for methane-gas emissions
* Agriculture ousts fossil fuels as big sulfur pollution source
* Trump briefly escorted from news conference after shots fired near White House
Equities today: Global stocks rose amid light trading volumes and a slide in volatility as the summer vacation season gets under way in the U.S. and Europe. Futures tied to the S&P 500 rose, suggesting a higher open, with traders focusing on Russia's vaccine claim. Hong Kong’s Hang Seng Index snapped three days of losses to rise 2.1% by the close of trading.
U.S. equities yesterday: The Dow gained 357.96 points, 1.30%, at 27,791.44. The Nasdaq, however, fell 42.63 points, 0.39%, at 10,968.36. The S&P 500 rose 9.19 points, 0.27%, at 3,360.47.
On tap today:
• Canada's housing-starts report for July is out at 8:15 a.m. ET.
• U.S. Producer Price Index for July is expected to show a 0.3% gain. (8:30 a.m. ET)
The Congressional Budget Office (CBO) on Monday said the budget gap last month totaled $61 billion, compared with $120 billion in July 2019, as revenue jumped. Receipts were still down 10% between April and June from a year earlier, reflecting the deep economic downturn triggered by the pandemic, which triggered widespread business closures and layoffs that have reduced tax revenue for the government, the CBO said.
The sharp decline in international tourism is potentially disastrous for a handful of emerging-market economies, the Wall Street Journal reports (link).
• Powerful storms raged across Iowa and northern Illinois on Monday with wind-speeds reaching triple digits in some areas. While officially called derecho, it was “dewrecko” for many farmers in the area. Farmers on Twitter shared photos of flattened crops and damaged grain bins, while some predicted millions of acres of corn could be affected.
• Imports at major U.S. retail container ports during 2020 are expected to see their lowest annual total in four years given the pandemic’s impact on the U.S. economy, according to the Global Port Tracker report released by the National Retail Federation (NRF) and Hackett Associates (link). “Shelves will be stocked, but this is not the year to be left with warehouses full of unsold merchandise,” Jonathan Gold, NRF’s vice president for supply chain and customs policy, said in a statement. “The more Congress does to put spending money in consumers’ pockets and provide businesses with liquidity, the sooner we can get back to normal.”
• Crude oil futures were higher in Asian activity, building on advances in U.S. action Monday. US crude was up 23 cents at $42.17 per barrel and Brent was up 14 cents at $45.13 per barrel. Gains have increased ahead of the U.S. trading start, with U.S. crude recently up more than 1.7% to trade around $42.65 per barrel and Brent has gained more than 1.3% to trade around $45.55 per barrel.
— CFAP payments just over $7 billion. Payments under the Coronavirus Food Assistance Program (CFAP) total $7.04 billion, still short of half of what USDA estimated to be the initial payments based on 80% of the total projected payments. Link for details.
Just over half of total payments made so far have gone to livestock — $3.54 billion — including $3.07 billion for cattle. Payments to non-specialty crop producers are at $1.85 billion with $1.33 billion for dairy. Specialty crop payments are at $305.6 million, 4.34% of total payments.
The actual payouts are only partially focused on the commodities that Congress outlined in the CARES Act as being ones that should see payments out of the $9.5 billion that was earmarked for providing support for agricultural producers, “including producers of specialty crops, producers that supply local food systems, including farmers markets, restaurants, and schools, and livestock producers, including dairy producers.” ….
— Hoyer signals House to vote in September to keep gov't operating. House Majority Leader Steny Hoyer (D-Md.) is signaling the House will vote on a temporary funding plan in September to keep the government operating past Oct. 1. “I expect the House to take action on a range of important issues, including ensuring the government is funded before the end of the month,” Hoyer said, stating the House would be in session most days from Sept. 14-30 for votes except Sept. 18 and 20 for Rosh Hashanah and Sept. 28 for Yom Kippur. “I hope Republicans will join us and act quickly to provide certainty that they will not shut the government down again.”
— Update on China:
- China flooding forces gov't to release stocks and buy U.S. food produce as food price inflation rises. Flooding has destroyed significant crops in China just as rice was coming ready to harvest in China, CNN reported. Estimates suggest that 13 million acres of crops have been flooded destroying some $1.7 billion in crops and another $19 billion in other infrastructure affecting around 55 million people. China has already released significant amounts of rice, corn and soybeans to help temper price rises. China's total cropland in 2019 was estimated at 165.93 million hectares or 410 million acres. “The flooding in many places had a particular impact on transportation of live pigs, so the supply is relatively tight,” the National Bureau of Statistics (NBS) said.
Torrential rain triggered the third flood peak of the Yangtze river recently, putting the Three Gorges Dam under severe pressure as China grapples to mitigate the impact of the deluge that has already impacted more than 45 million people and resulted in losses worth billions of dollars. Authorities have issued warnings of possible new flood peaks in the near future, requiring the Three Gorges Dam to reserve enough space for possible floods. Warning against a new peak that may appear later, China’s water resources ministry said, “The flood control and flood fighting situation is severe.” China’s ministry of emergency had said that since June 1 the latest round of floods — possibly the worst since 1998 — had affected 45.52 million in 30 Chinese provinces including specific cities and counties.
- China in a delicate balancing act as it keeps the Phase 1 trade deal alive. The country is reportedly scrapping expensive Brazilian soybean purchases and replacing previously done deals with American supplies, reports note.
- Beijing will honor Phase 1 deal by opening financial sector wider, its central bank chief says. Vice-Premier Liu He is expected to hold a video conference this week with U.S. Trade Representative Bob Lighthizer and Treasury Secretary Steven Mnuchin to discuss the trade deal. Central bank governor Yi Gang says Wall Street’s trading houses will be allowed to have exclusively owned brokerage operations in China.
- U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.
- Companies from China and other countries that do not comply with accounting standards will be delisted from U.S. stock exchanges as of the end of 2021, according to U.S. Treasury Secretary Steven Mnuchin. The U.S. will also soon require imports from Hong Kong to be labeled as 'Made in China' following a notice that's set to be published today in the Federal Register. Imported goods produced in Hong Kong must be labeled as a product of China as of Sept. 25, 2020. Failure to comply will result in an ad valorem duty of 10% being levied on the products in question. Link
— Update on next aid package:
- Trump administration officials and Democratic leaders urged each other to return to the negotiating table to craft a broad coronavirus package after President Trump's executive actions on jobless aid and other relief over the weekend. Treasury Secretary Steven Mnuchin said he believed states could start rolling out additional federal unemployment payments within two weeks, as officials made clear that states could provide $300 a week in federal funds for unemployed workers without adding any of their own funds. The initial plan released Saturday had envisioned a total weekly payment of $400, with states contributing $100, with some state escape clauses.
- Sen. Ben Sasse (R-Neb.), who has criticized Trump before, joined Democrats in denouncing the executive actions the president announced when Congress couldn’t reach a deal, calling them “unconstitutional slop.” Trump mocked Sasse as a “Republican in Name Only” and tweeted that he was playing “right into the hands of the Radical Left Dems.”
— Update on implementation of CARES 1, including CFAP:
- The federal government spent almost $250 billion on enhanced unemployment benefits from early April to the end of July, the Labor Department said, as millions of workers were laid off amid the pandemic.
California received the largest total amount, $38.4 billion, and South Dakota received the least, $177.1 million, according to the Wall Street Journal’s analysis. Michigan received the largest amount of benefits when adjusting for the size of the labor force in February. The state received $2.9 million per 1,000 workers in the state. It was followed by New York and Pennsylvania.
— Food and beverage industry update:
- CDC report focuses on why so many Smithfield employees got Covid-19. A report (link) by the Centers for Disease Control (CDC) said that of the 929 employees at a Smithfield meat processing facility in South Dakota, the highest Covid-19 infection rates occurred among employees who worked less than 6 feet from one another on the production line. “Implementing control measures before, or soon after, SARS-CoV-2 introduction into meat processing facilities, especially in areas where employees have prolonged, close contact with others, might substantially reduce the risk for SARS-CoV-2 spread within facilities,” the CDC said.
- Shortages in grocery aisles have eased but they haven’t gone away. Shelves remain generally emptier than they were before the pandemic, the Wall Street Journal reports (link), and some executives believe the U.S. could be in for more supermarket supply chain disruption as Covid-19 cases continue to rise in some states. The outlook “suggests the efforts to rapidly bulk up production of consumer staples amid a rush for goods this spring has been only partly successful,” the article notes. Grocers are reporting “a new increase in staples purchases that could lead to scarcity, and persistent strong demand for items such as baking ingredients has made it tough for manufacturers to produce items fast enough to keep shelves full.” One supplier of canned and frozen vegetables says it “blew through its inventory this spring and still has little buffer stock to handle any new runs on stores.” Leaving shelves 90% full for half a year would cost the supermarket industry some $10 billion in lost revenue, according to research from trade associations.
- An online campaign that antitrust advocates are unveiling today will seek to limit the market power of online food delivery apps like Grubhub Inc. and Uber Eats by getting local and state governments to limit the fees and commissions the apps can charge. The campaign, which also targets Postmates and DoorDash Inc., accuses the companies of using anti-competitive and predatory business practices during the Covid-19 pandemic to exploit restaurant owners and their employees — millions of whom are out of work — for profit while draining revenue from local economies, even as the food industry stands to lose $240 billion by the end of the year. Some big cities, like Seattle and New York City, have already capped the commissions charged by the apps, which can eat up as much as 30% of the bill. But the campaign’s backers want restaurant owners in smaller cities to be able to wield the same organizing power.
- McDonald’s is suing its former CEO Steve Easterbrook for alleged lying and concealing evidence, and the company wants to take back stock options and other compensation that Easterbrook kept after he was fired in November for sexting with a subordinate. Link to details in the New York Times.
— Coronavirus update:
- Summary: Source: Johns Hopkins University as of 7:00 a.m. ET.
— 20,092,855: Confirmed cases world-wide, and 584,556 deaths
— 49,536: New U.S. cases recorded yesterday
— 5,094,565: Total confirmed cases in the U.S.
— 525: Deaths in the U.S. recorded yesterday
— 163,465: Total U.S. deaths
— 62,513,174: Tests conducted in the U.S.
The U.S. reported fewer than 50,000 new coronavirus cases for the second consecutive day, even as the number of cases world-wide surpassed 20 million. More than 49,000 new cases were reported in the U.S., pushing the total number close to 5.1 million, according to data compiled by Johns Hopkins University. The nation’s death toll exceeded 163,000.
Link to Covid Case Tracker
Link to Our World in Data
- Russia registered the world’s first Covid-19 vaccine, developed by the Gamaleya Institute in Moscow, President Vladimir Putin said, but raising safety concerns in the West over the country’s accelerated clinical evaluations. Putin said that one of his daughters has already been inoculated. Putin emphasized that the vaccine underwent the necessary tests and has proven effective, offering a lasting immunity from the coronavirus. However, scientists elsewhere have been sounding the alarm that the rush to start using the vaccine before Phase 3 trials — which normally last for months and involve thousands of people — could backfire. Other vaccine candidates, including ones being developed in the U.S. and Britain, are undergoing such widespread tests.
- White House mulls Covid-related border restrictions. Officials are considering a proposal that would give U.S. border authorities the extraordinary ability to block U.S. citizens and permanent residents from entering the country from Mexico if they are suspected of being infected with the novel coronavirus. Stopping citizens from entering their own country would likely spark legal challenges.
POLITICS & ELECTIONS
— 2020 Presidential Election Interactive Map
— The Green Papers
- GOP primary election in western Minnesota today to choose challenger to House Ag Chairman Collin Peterson (D-Minn.) in 7th Congressional District. Republican candidates include former Lt. Gov. Michelle Fischbach, who has the party endorsement; David Hughes, the GOP nominee in 2016 and 2018; and three others. President Trump, who backs Fischbach, carried the district by a large margin in 2016 and Peterson is being targeted by Republicans. Fischbach’s closest competitor is Hughes, a retired Air Force major who most recently came within four points of Peterson in 2018. On Monday, President Trump tweeted is support for Fischbach, who has raised more than $1 million, compared with Hughes’ $67,000.
- Grassley blasts Democrat Greenfield in Iowa Senate race. Recent polls show Theresa Greenfield, the Democratic Senate candidate in Iowa, slightly ahead of Sen. Joni Ernst (R-Iowa). Senate Finance Committee Chairman Chuck Grassley (R-Iowa) discussed both candidates during a call with reporters today to “discuss why Theresa Greenfield is wrong for Iowa, wrong for farmers and wrong for working families.” While Grassley acknowledged that Greenfield has campaigned as a “friend of the farmer,” he said Greenfield’s endorsement from former President Barack Obama implies she would support the Waters of the United States (WOTUS) rule, which the Obama administration put forward but that the Trump administration has rewritten. “Are we going to get back to the Waters of the United States again?” Grassley asked. Greenfield’s biggest supporter, Grassley said, is Senate Minority Leader Chuck Schumer (D-N.Y.), noting Schumer “has spent his career trying to gut” the Renewable Fuel Standard. Grassley said Ernst should get credit for the Trump administration’s approval of E15 gasoline, for providing money to filling stations to put in E15 pumps and for taking on the Environmental Protection Agency.
- Joe Biden has completed his vice-presidential interviews and dissolved his vetting team. The announcement is expected midweek. “This is like the best-kept secret in the universe,” former Senator Barbara Boxer of California said.
- Among those speaking at the Democratic National Convention next week: Sen. Bernie Sanders of Vermont, Rep. Alexandria Ocasio-Cortez of New York, Hillary and Bill Clinton, and Barack and Michelle Obama. Also speaking: John Kasich, the former governor of Ohio and 2016 presidential candidate, who is a “never Trump” Republican. Biden’s running mate will address the convention on Wednesday. As a precaution, planners have scheduled speaking times for some top vice-presidential contenders in case they are not picked, including Gov. Gretchen Whitmer of Michigan and Senators Kamala Harris and Elizabeth Warren.
OTHER ITEMS OF NOTE
- Mexico is objecting to a U.S. interim rule on how it will conduct investigations that could restrict Mexican long-haul truckers from operating in the U.S. On the other side: Teamsters Union and other U.S. groups who welcome the new rule for creating a “thorough review process.” Mexico argued the proposed rule went beyond what was agreed in the U.S.-Mexico-Canada Agreement (USMCA) by creating the possibility that U.S. truckers could win relief by proving they have been materially harmed by competition from Mexican rivals in a “relevant sub-market,” rather than the U.S. market as a whole. Mexico also said the International Trade Commission's use of the term “cross-border” in the proposed rule could allow the commission to find “material injury due to alleged harm caused to only one part of the ‘long-haul truck services’ sector.”
The Teamsters Union and the Owner-Operator Independent Drivers Association, in their filing, said: “Since the USMCA renegotiation process commenced in 2017, our organizations have worked closely with the U.S. Trade Representative and Congressional Committees of jurisdiction to craft a new trade remedy to address the threats of material harm under the current cross-border trucking rules. We were pleased with the outcome at the table and in the implementing bill as USMCA establishes a thorough review process to restrict operating authority for Mexican-domiciled carriers and operators.”
- Global trade in services is expected to jump to $8 trillion by 2025 from $6.1 trillion in 2019, a 31% increase in value, according to a report (link) from Western Union and Oxford Economics. Among developed economies, the U.S. France, and U.K. are set to see the largest increase in value of cross-border trade in services by 2025. Adoption of new technology and digitization of working practices are likely to further fuel post-pandemic economic recovery and growth of cross-border trade in services, Trade policy liberalization could see an additional $890 billion increase in the value of services traded globally. In the U.S., total services exports are projected to rise by $210 billion by 2025, with digitally deliverable services, like B2B and financial services, contributing almost 75 percent of this growth, according to the report.
- Commerce announces preliminary aluminum duties. The Commerce Department set preliminary countervailing duties on hundreds of millions of dollars of common alloy aluminum sheet from Bahrain, Brazil, India and Turkey. The largest of the four foreign suppliers, Bahrain, received a preliminary rate of 9.49%, while India was hit with rates ranging from 4.55% to 34.84%. Commerce set lower duty levels for Brazil and Turkey. Last week, President Trump re-imposed a 10% “national security” duty on primary aluminum imports from Canada.
- ITC vote will continue countervailing duty investigation on fertilizer from Russia, Morocco. The U.S. International Trade Commission (ITC) voted Aug. 7 that there is a “reasonable indication that a U.S. industry is materially injured by reason of imports of phosphate fertilizers that are allegedly subsidized by the governments of Morocco and Russia.” The ITC decision means that the Department of Commerce (DOC) will continue its countervailing duty investigations concerning imports of these products from Morocco and Russia. DOC is due to make its preliminary determinations on or about Sept. 21.
- EPA is preparing to adopt new rules that would rescind regulations for methane-gas emissions, including ending requirements that oil-and-gas producers have systems and procedures to detect methane leaks in their systems, senior administration officials said. The changes also ease reporting requirements for the industry and, for some facilities, how often a plant must check for leaks of other pollutants, the officials said.
- Agriculture ousts fossil fuels as big sulfur pollution source. Adding more fertilizer and pesticides to crops is now a major source of sulfur pollution in the U.S, overtaking the sulfur emissions from fossil fuel-powered plants, a new study concludes. Coal-fired power plants are no longer the largest source of reactive sulfur, a component of acid rain that was responsible for degrading air, water, and soil quality miles away, said the study published yesterday in the Nature Geoscience Journal.
- Trump briefly escorted from news conference after shots fired near White House. A Secret Service agent interrupted the president’s prepared remarks about the stock market and told him, “Sir, we’re just going to have to step outside.” The president returned to the briefing room soon afterward and told reporters he had been taken to the Oval Office out of an abundance of caution. He said law-enforcement officials had shot a suspect. “It seems to be very well under control,” he said. The Secret Service in a tweet later Monday evening confirmed that an officer had been involved in a shooting near the White House — a “51-year-old man had approached an officer posted near 17th Street and Pennsylvania Avenue NW around 5:50 p.m. ET and said he had a weapon, said Thomas Sullivan, chief of the Uniformed Division of the Secret Service. Later in another tweet, the agency said a man and a Secret Service officer were both transported to a local hospital. “At no time during this incident was the White House complex breached or were any protectees in danger,’’ the agency added.