Bottom Line of Fed Powell’s Remarks Friday: Higher for Longer

Fly me to the moon… delayed until later this week due to fuel leak

We have a new section at the end of each daily dispatch called Key Links where you will find links to major topics. They will be updated as warranted.

Fed’s Powell vows to whip inflation and warns pain is coming. Details and analysis below.

Investors are looking forward to the August jobs report, scheduled for Friday, as they weigh just how big a rate hike could be coming from the Fed in September. As for equities, futures signal additional losses in opening calls. September is historically the worst month for markets, adding to investors’ jitters.

The International Atomic Energy Agency, the U.N.’s nuclear watchdog, has assembled a team of experts with the hope that they will visit the plant in southern Ukraine “in the next few days,” officials said. They would assess physical damage, determine whether safety and security systems are functional and evaluate working conditions, the agency said. Meanwhile, Ukrainian officials have rushed to hand out potassium iodide to tens of thousands of people living near the plant. The drug can protect people from radiation-induced thyroid cancer.

Russia’s president, Vladimir Putin, offered incentives to Ukrainians to move to his country, part of widening efforts to integrate people living in territory it occupies.

Washington and Beijing have moved one step closer to Chinese businesses being able to retain their listings in the U.S. following a long-running dispute. Info in China section.

Two U.S. warships sailed through the Taiwan Strait yesterday, defying Chinese pressure.

Gas storage centers are quickly filling up in Germany. Despite continuing pressure on energy exports from Russia, an 85% capacity goal for October could be met by early next month.

British household energy bills are expected to nearly double in October.

Euro net short positions are at their highest levels since the start of the pandemic.

Energy Secretary Jennifer Granholm in a letter called on major U.S. oil refiners to build up capacity and reduce exports of refined products ahead of the winter. Details in Energy & Climate Change section.

Does California have enough energy to ban gas cars? Some perspective on that below.

The shipping capacity squeeze is moving from the water to land. We digest a WSJ article on the topic.

U.S. food and beverage companies are racing to keep operations running during a nationwide shortage of carbon dioxide. Details in Food Industry section.

Some farmers want the right to jailbreak their John Deere tractors. We link to a Quartz article on the topic.

Floods devastated parts of Pakistan. The country is seeking international aid after heavy monsoon rains killed more than 1,000 people.

Moderna is suing Pfizer and BioNTech for Covid-19 vaccine patent infringement.

No more free Covid tests from the government. The federal government will stop sending free Covid tests to Americans this Friday, according to a senior Biden administration official. “If Congress provides funding, we will expeditiously resume distribution of free tests through covidtests.gov,” the person said, according to NBC. “Until then, we believe reserving the remaining tests for distribution later this year is the best course.”

The predictions of pollsters and election watchers in recent years have led to some glaring misses. Are they setting themselves up, again, for a big miss? Details in Elections & Poliltics.

GOP senator: Trump 'should have turned the documents over.’ Former President Donald Trump should have turned over documents stored at his residence in Mar-a-Lago after leaving office, according to retiring Sen. Roy Blunt (R-Mo.).

EPA proposes designating two ‘forever chemicals’ as hazardous.

NASA is returning to the moon, but a fuel leak interrupted its launch countdown today of NASA’s moon rocket.

We may be able, eventually, to fly to the moon again, but air travel disruptions here will persist through the winter. Airlines and airports plan to keep cutting flight schedules and keeping passenger caps as they continue to struggle with a surge in travel and a shortage of workers. Some airlines predict the turmoil could extend to next summer.

Equities today: Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward lower openings. About a dozen S&P 500 companies will report their latest results this week. On Tuesday, Best Buy Co Inc is expected to report a drop in second-quarter sales, as soaring inflation pushes consumers to shift spending away from discretionary products such as electronics. Reuters notes that Wall Street will also be keen to hear the retailer's take on its inventory levels and whether steeper discounts will be needed to spur demand heading into the holiday season. Economists and investors will also be paying close attention to Friday's jobs report for August. In Asia, Japan -2.7%. Hong Kong -0.7%. China +0.1%. India -1.5%. In Europe, at midday, London closed. Paris -1.9%. Frankfurt -1.6%.

     U.S. equities Friday: In his Jackson Hole speech, Fed Chair Jerome Powell warned that the battle to bring down inflation could result in “some pain” for Americans — and stocks suffered their worst day in two months and closed out their second losing week in a row. The Dow plunged 1,008.38 points, 3%, to 32,283.40, the blue-chip index’s biggest one-day drop since May. The S&P 500 fell 141.46 points, 3.4%, to 4,057.66. The Nasdaq slid 497.56 points, 3.9%, to 12,141.71. Even with the week’s losses, the S&P 500 is up 11% from its June low.

     For the week, the S&P 500 fell 4%, giving up all its gains for the month of August, the Dow Jones lost 4.2%, and the tech-heavy Nasdaq slid 4.4%.

     CF Industries was one of just five S&P 500 stocks that ended higher in Friday's stock market plunge, closing +0.8% and reaching another new intraday record $119.60, with U.S. fertilizer producers surging as competing European ammonia plants close because of high natural gas prices. CF's U.K. subsidiary said it will temporarily halt ammonia production at its Billingham plant, which has a capacity of 400,000 tons/year. Mosaic and Nutrien ended Friday with slight losses, but for the week finished +15.4% and +11.1%, respectively; CF closed +14.5% on the week.

Agriculture markets Friday:

• Corn: December corn futures rose 14 1/4 cents to $6.64 1/4, a gain of 41 cents for the week and the contract’s highest closing price since $6.74 on June 24.
• Soy complex: November soybeans surged 30 cents to $14.61 1/4, a gain of 57cents for the week and the contract’s highest close since July 29. September soymeal rose $20.10 to $478.10, while September soy oil rose 173 points to 70.82 cents.
• Wheat: December SRW wheat futures 16 1/4 cents to $8.05 1/4, up 34 1/4 cents for the week. December HRW wheat gained 16 cents to $8.82 1/4, up 35 1/4 cents for the week. December spring wheat rose 13 3/4 cents to $9.09 1/2, up 22 1/2 cents for the week.
• Cotton: December cotton rose 357 points to 117.68 cents, up 167 points for the week and posting a five-week high close.
• Cattle: October live cattle fell 60 cents to $143.05, down $2.20 for the week and the lowest closing price since Aug. 2. September feeder futures fell $2.05 to $182.20, down $2.55 for the week. Choice beef cutout values fell 19 cents early Friday to $263.35.
• Hogs: October lean hogs fell 45 cents to $90.65, down $2.475 for the week. Pork cutout values fell $3 early Friday to $99.66, the lowest since mid-May, but middy movement was strong at 226 loads. The CME lean hog index fell $1.95 to $116.05, a drop of $3.13 over the past two days and the lowest level in nearly six weeks. The next index is expected to drop another $2.73, which may further pressure futures.
   

Ag markets today: Corn futures extended last week’s gains overnight, while soybeans and wheat traded lower. As of 7:30 a.m. ET, corn futures were trading mostly 5 to 6 cents higher, soybeans were mostly 18 to 19 cents lower and wheat futures were 6 to 9 cents lower. Front-month crude oil futures were around 30 cents higher and the U.S. dollar index was about 200 points higher this morning.

Technical viewpoints from Jim Wyckoff:

On tap today:

     • Dallas Fed's manufacturing survey is expected to rise to minus 12.3 in August from minus 22.6 one month earlier. (10:30 a.m. ET)
     • USDA Grain Export Inspections report, 11:00 a.m. ET.
     • Fed Vice Chair Lael Brainard speaks at a FedNow Early Adopter Workshop at 2:15 p.m. ET.
     • USDA Crop Progress report, 4 p.m. ET.
     • White House just announced that it will host the major Conference on Hunger, Nutrition, and Health on Sept. 28, the first of its kind in more than half a century. The confab will include a new national strategy for tackling these issues, as stakeholders convene to “achieve the goal of ending hunger and reducing diet-related diseases in the U.S. by 2030.” It was first announced this spring, but the administration didn’t specify the date until now.

Fed Chair Jerome Powell at Jackson Hole, Wyoming: What he said and did not say.

• Powell said the Fed will continue raising interest rates and hold them at a higher level until it is confident inflation is under control.
• He noted that reaching an estimate of the longer-run neutral rate is not a place to pause or stop. "Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy," he warned.
• Powell didn’t comment directly on the outlook for the Fed’s coming policy meeting in September but said the next rate decision “will depend on the totality of the incoming data and the evolving outlook. At some point, as the stance of monetary policy tightens further, it will likely become appropriate to slow the pace of increases.”
• Powell said the June FOMC projections suggest rates would rise to just below 4% through the end of 2023 and that historical accounts warned against loosening policy too soon.
• Powell's comments sparked a 1,000-point drop in the Dow, and the percentage losses were even steeper on the S&P 500 and Nasdaq Composite.
• Two-year U.S. Treasury yield, which is closely tied to expectations for the Fed’s benchmark interest rate, spiked after Powell’s speech and settled at 3.391%, up from 3.372% on Thursday. Bond yields and prices move in opposite directions.
• 10-year yield inched up to 3.034% from Thursday’s 3.023%. That extended the inversion between short-term and long-term yields, a key recession indicator from the bond market.
• Analysis: Cliff Hodge, chief investment officer at Cornerstone Wealth, says Powell's speech "unequivocally implies" the Fed is okay with risking a recession in order to lower inflation and raises the odds of one occurring over the next year.
• WSJ editorial: The faster the Fed gets inflation down, the better for markets. “The good news for the Fed is that price increases have been moderating of late, and money-supply growth has been slowing for some time. The latter should portend progress in future months. But the Fed has a credibility problem because it was so wrong for so long about rising prices. That explains why Mr. Powell now has to tell markets a harder anti-inflation truth than they expect or want.” Link for details.
• Bottom line: The Fed may have to lift interest rates aggressively for the next few months, but it may still slow down after that period, especially if inflation can keep declining. The terminal fed funds rate, or the rate at which the Fed will stop hiking, is still less than 50% likely to go all the way up to 4%.

Inflation eased in July, according to the Fed’s preferred measure.

Some farmers want the right to jailbreak their John Deere tractors. As tractors become more high-tech, who gets to fix and manage them is up for debate. Many farmers are used to repairing their equipment and want to keep that right. But tractor manufacturers like John Deere say unsanctioned tweaking of their equipment poses safety hazards. Link to Quartz article.

 “At least over the next five years, monetary policymaking is going to be much more challenging than it was in the two decades before the pandemic struck,” Gita Gopinath, the IMF’s deputy managing director, told the Financial Times (link). “We are in an environment where supply shocks are going to be more volatile than we’ve been used to, and that’s going to generate more costly trade-offs for monetary policy,” she said.

     David Malpass, president of the World Bank, warned that central banks’ tools, especially in advanced economies, are ill-suited to address the supply-related inflationary pressures that are driving a significant portion of the recent inflation surge. “The rate hikes are having to compete with lots of friction within the economy, so I think that’s the biggest challenge that they face,” he said. “You’re hiking rates in the hope of reducing inflation, but it is being counteracted by so much friction within the supply chain and production cycle.”

Social Security COLA 2023: How much will benefits increase next year? “It’s not possible to be precise until we see the data for the next two months, but it’s probably safe to say at this point we can expect a COLA in the 8% to 10% range,” says David Certner, legislative counsel and director of legislative policy for government affairs at AARP. That would be the biggest increase since 1981, when the COLA was 11.2%. Any estimates are preliminary; the actual COLA will depend on changes in consumer prices through the end of September. A 9% COLA would boost the average Social Security retirement benefit by about $150 a month in 2023. “I think somewhere in the 9% range is probably a reasonable guess,” says Richard Johnson, director of the retirement policy program at the Urban Institute, a Washington, D.C.-based research organization. Link to more from AARP.

Sen. Elizabeth Warren (D-Mass.) is worried, again, this time on the Fed doubling down on fighting inflation. Her remarks on CNN’s State of the Union: “Do you know what’s worse than high prices and a strong economy? It’s high prices and millions of people out of work. I’m very worried that the Fed is going to tip this economy into recession.”

Airlines and airports around the world have been extending passenger caps and cuts to flight schedules through the fall and winter, attempting to steady operations after a wild summer of global travel disruptions that show signs of easing, the Wall Street Journal reports (link). Despite some recent improvements, travel consultants say they are bracing for flight disruptions for months to come as the industry balances demand with a workforce that is still ramping back up after pandemic-related cutbacks.

Market perspectives:

     • Outside markets: The U.S. dollar index is firmer in early U.S. trading. The U.S. dollar hit a 20-year high today, coming on the heels of Federal Reserve Chairman Jerome Powell’s comments that the central bank will continue to tackle inflation “forcefully,” seemingly by continuing to increase interest rates. A stronger dollar could help ease inflation as imports of goods and services become cheaper but could also deal a blow to the stock market as 30% of the revenue earned by S&P 500 companies stems from outside the U.S. Meantime, the yield on the 10-year U.S. Treasury note is fetching 3.114%. The 2-year U.S. T-Note is yielding 3.47%, keeping the yield curve inverted and hinting of an impending U.S. recession. Crude is higher ahead of U.S. market action, with U.S. crude around $93.45 per barrel and Brent around $99.45 per barrel. Gold and silver futures were lower, with gold around $1,739 per troy ounce and silver around $18.39 per troy ounce.

     • Euro net short positions are at their highest levels since the start of the pandemic, as the risk grows that record energy prices will drag the region into recession. At the annual gathering of central bankers in Jackson Hole this weekend, European Central Bank executive board member Isabel Schnabel and François Villeroy de Galhau, the French central bank governor, warned that monetary policy would stay tight for an extended period in Europe. Speculators built up net short positions on the euro — a way to bet the currency will drop in value — of 44,100 contracts in the week to August 23, up from 42,800 the previous week, according to data from the Commodity Futures Trading Commission.

     • Bitcoin sank to below $20,000, trading at its lowest levels in over a month. The cryptocurrency market is in retreat as the Federal Reserve mulls more rate hikes.

     • The U.S. Department of Transportation declared a regional emergency for Illinois, Indiana, Michigan and Wisconsin after a fire shut down the BP oil refinery in Whiting, Ind., the largest in the Midwest and No. 6 in the nation. There hasn't been an impact on gas prices so far, and analysts caution against consumers "panic" buying gas.

     • Pro Farmer national corn and soybean crop estimates:

        Corn: 13.759 billion bu.; Average yield of 168.1 bu. per acre
        Corn +/- 1% = 13.897 billion bu. to 13.621 billion bu.; 169.8 bu. to 166.4 per acre

        Soybeans: 4.535 billion bu.; Average yield of 51.7 bu. per acre
        Soybeans +/- 2% = 4.625 billion bu. to 4.444 billion bu.; 52.7 bu. to 50.7 bu. per acre

        The national estimates above reflect Pro Farmer’s view on production and yields. They consider data gathered during the Pro Farmer Crop Tour and other factors like crop maturity, historical differences in Tour data versus USDA’s final yields, areas outside those sampled on Tour, etc. That’s why the state yield numbers differ from the Crop Tour figures. Pro Farmer said: “We hope our corn yield and production estimates are too low, but that’s what the Crop Tour data indicated. Based on August FSA certified acreage data, we increased soybean acreage by 500,000 acres. We made no adjustment to corn acreage.”

     • The shipping capacity squeeze is moving from the water to land. Logistics executives say sea containers and the steel trailers needed to ferry goods on trucks are in short supply, the Wall Street Journal reports (link), as efforts to cope with steep inventory imbalances send new backups rippling across supply chains. Executives say shippers are tying up the transportation equipment for weeks at a time, often because they are storing goods as warehouses brim to capacity. It’s the latest sign of how ad hoc tactics aimed at solving short-term problems raise disruptions elsewhere in distribution channels. In this case, logistics companies say they’re waiting longer periods for empty sea containers and truck chassis, complicating efforts to keep imports flowing and hampering outbound business. One chassis provider says its equipment is tied up about three times longer than the trailers were out before the pandemic.

   • Barron’s cover story: Water scarcity is a rising threat. The article says it’s now “critical for businesses and investors to assess water risk—whether it be scarcity, quality, or vulnerability to floods.” Link for details.

     • Pakistan continues in the throes of a humanitarian emergency as extreme flooding sweeps away entire villages and upends millions of lives, further straining a country already embroiled in political and economic turmoil. More than 1,000 people have died since mid-June. Sherry Rehman, Pakistan’s top climate official, said the deluge is “the worst humanitarian disaster of this decade” and could leave as much as one third of the country under water. “Pakistan has never seen unrelenting torrential rains like this. This is very far from a normal monsoon,” Rehman told the Guardian (Link). “It is a climate dystopia at our doorstep.” Many still remain stranded and in need of food and supplies, while more than 33 million people have been impacted by the floods. Tens of thousands of livestock have died.

        The International Monetary Fund is expected to pass a $1.2 billion package this week to aid its recovery. In an interview with Reuters, Pakistani Foreign Minister Bilawal Bhutto-Zardari pleaded for financial support and said he believed the flooding’s economic fallout could exceed $4 billion. “Despite the fact that Pakistan contributes negligible amounts to the overall carbon footprint,” he told Reuters, “we are devastated by climate disasters such as these time and time again, and we have to adapt within our limited resources, however we can, to live in this new environment.”

     • Ag trade: Algeria tendered to buy a nominal 50,000 MT of optional origin soft milling wheat.

     • NWS weather: Slight to enhanced risk of severe thunderstorms across parts of the Midwest on Monday... ...Moderate to locally heavy/excessive rainfall expected from the Ohio Valley/Northeast back into the southern Plains, and across parts of Texas… ...Record heat likely to build into parts of the West this week. 

Items in Pro Farmer's First Thing Today include:

     • Corn firmer, soybeans and wheat weaker to open the week
     • Scattered rains early this week, then drier
     • Ukrainian grain exports top 1 MMT (details in Russia/Ukraine section)
     • Canadian crop production estimates out later this morning
     • Kazakhstan to scrap wheat export caps
     • Indonesia raises palm reference price, export tax
     • Wait-and-see attitude for cash cattle trade
     • Cash hog index falling at a faster rate

— Summary: Russia is lining up reinforcements for its stalled invasion. A series of volunteer battalions formed in recent weeks across Russia is preparing to deploy to Ukraine, officials and military analysts say, according to the Wall Street Journal (link). This includes a major new ground-forces formation called the 3rd Army Corps. Footage of the soldiers training displays modern weaponry of a kind rarely deployed to Ukraine, analysts say, but not all Western observers are convinced that will be enough to help Moscow break the stalemate setting in on the battlefield. Meanwhile, U.S. and European officials say Ukraine is successfully using a method of resistance warfare developed by the US to fight back against Russia. The concept provides a blueprint for smaller nations to effectively resist and confront a larger neighbor that has invaded.

• The International Atomic Energy Agency assembled a team of experts to visit the Zaporizhia nuclear power station in south-eastern Ukraine, possibly in the next few days, the New York Times reported. The Russian-occupied plant was hooked back up to Ukraine’s electricity grid on Friday, according to the national atomic-energy company, having been disconnected in a fire triggered by artillery shelling. Volodymyr Zelenskyy, Ukraine’s president, said Europe narrowly avoided a “radiation disaster.”
• Here we go again… Russia to turn off gas tap for repairs. As of Wednesday, Russia will halt gas supplies through its largest pipeline to Germany for three days of maintenance work. Nord Stream 1 was already running at only 20% capacity.
• Putin offers incentives to Ukrainians to come to Russia and stay there. Russian President Vladimir Putin signed a pair of decrees on Saturday providing Ukrainians with financial benefits and the right to work. One decree establishes a monthly pension of about $170 for people who have been forced to leave Ukraine since Feb. 18, a week before Russia launched its invasion and plunged the region into war. It also provides monthly pensions for disabled people and a one-time payment to pregnant women.
• Ukrainian police discover more than 1,300 dead bodies in Kyiv. In Bucha, they are forced to bury the dead with numbers, not names, according to CNN.

• Ukrainian grain exports top 1 MMT. More than 1 MMT of grains and other foods have so far been exported from Ukrainian ports since the deal was signed to resume shipments. However, millions of metric tons of grains from previous years still need to be cleared to make room for this year’s harvest, the United Nations coordinator for the grains export deal said on Saturday. Since July 1, Ukraine has exported 3.6 MMT of grains, according to the country’s ag ministry, down 52.6% from the same period last year. Exports included 2.33 MMT of corn, 981,000 MT of wheat and 289,000 MT of barley.
• China to sell state pork reserves. China’s state planner said it will release pork reserves from September to ensure meat supply during upcoming holidays when demand typically increases. Pork prices have risen rapidly in recent months amid tighter supplies. 
• China’s sow herd increased in July but below year-ago. China’s sow herd at the end of July totaled 42.98 million head, according to the country’s ag ministry, up 0.5% from June but down 5.3% from last year. 
• EU set to suspend visa travel agreement with Russia. The plan to freeze 2007 deal will make it harder and more expensive for Russians to get Schengen-area documents. 
• EU defense ministers are in Prague today for an informal meeting to discuss military support for Ukraine. One item on the agenda is EU foreign affairs chief Josep Borrell’s idea of an EU training mission for the Ukrainian armed forces. 
• As of Saturday, gas storage across the European bloc was close to the 80% target set by the European Commission earlier this year — with Germany, France, Italy and Spain already going beyond that target, according to data compiled by Gas Infrastructure Europe.
   

— Rep. Tim Ryan (D-Ohio) on why he opposes Biden’s student loan relief, on CNN’s State of the Union: “The cost of college is outrageous. But there’s nothing in here to control that cost. And again, I think we can get a significant way down the road by allowing them to renegotiate down the interest rates … If it’s part of a broader package, we can certainly talk about it … The general tax cut’s the best way to go.”

     Meanwhile, Sen. Elizabeth Warren (D-Mass.) said the next step is to tackle the cost of college. While she praised Biden’s decision to cancel up to $20,000 in student loan debt for some borrowers, Warren told CNN’s State of the Union that universities and public education have widespread problems that must be addressed.

— While the college debt forgiveness is free of federal taxes, some states have laws that treat the canceled debt as taxable income, according to Jared Walczak, vice president of state projects at the Tax Foundation. Walczak said that, in general, canceling student debt is taxable because it counts as income. However, the American Rescue Plan Act (ARPA) stipulates that forgiven student loan debt is excluded from federal taxable income through 2025. Many states follow the federal treatment of student debt discharge but some do not, he pointed out. Whether or not discharged student debt is taxed or exempt at the state level is based on how state laws interact with the Internal Revenue Code (IRC). Some states conform to the IRC with ARPA or don’t fully conform to the IRC but adopt certain provisions of the ARPA that make forgiven student loans tax-exempt. But some states conform to the IRC but decouple from ARPA. Others selectively conform to the IRC or have their own definition of income. In such cases, student debt discharge is taxable.

     The Tax Foundation estimates that there are 13 states which could impose a tax on discharged student debt, though they may take steps to make it exempt. The following states have the potential to impose state-level taxes on discharged student loan debt: Arkansas, Hawaii, Idaho, Kentucky, Massachusetts, Minnesota, Mississippi, New York, Pennsylvania, South Carolina, Virginia, West Virginia, and Wisconsin.

     Meanwhile, the Education Department shared new details on how student loan relief will work. Link to Forbes article for details.

— U.S. and China reached an agreement that could avert the delisting of hundreds of Chinese companies from American stock exchanges. The deal will enable American regulators to examine audit documents, which Chinese authorities have resisted. Companies face delisting if they fail to show regulators their books for three years. In August five Chinese state-owned companies said they would delist.

— On Sunday, the U.S. Navy sent two guided-missile cruisers through the Taiwan Strait, which China now claims as its "internal waters." The U.S. and others maintain the strait is international waters under the United Nations Convention on the Law of the Sea. The USS Chancellorsville and USS Antietam, a pair of guided-missile cruisers, sailed in international waters between Taiwan and the Chinese mainland. “The ship’s transit through the Taiwan Strait demonstrates the United States’ commitment to a free and open Indo-Pacific,” the U.S. Navy said in a statement. “The United States military flies, sails, and operates anywhere international law allows.” There was a muted response from Beijing. The Chinese military's Eastern Theater Command said it monitored the two ships, maintained a high alert and was "ready to thwart any provocation."

— Energy Sec. Granholm to refiners: Cut exports. Energy Secretary Jennifer Granholm in a letter called on major U.S. oil refiners to build up capacity and reduce exports of refined products ahead of the winter. Granholm noted the reduced availability of diesel inventories along the East Coast, which are nearly 50% below the five-year average. Refined product exports are at a record high. “Given the historic level of U.S. refined product exports, I again urge you to focus in the near term on building inventories in the United States, rather than selling down current stocks and further increasing exports,” Granholm wrote, saying that such a buildup would be an alternative to emergency measures such as releases from the Northeast Gasoline Supply Reserve. The letter was reported first by the Wall Street Journal, which accused Granholm in an editorial (link) of attempting to strong-arm the energy industry and abandoning European nations weaning themselves off Russian imports.   

— Does California have enough energy to ban gas cars? California announced last week that it will ban the sale of internal combustion engine passenger cars by 2035. California is the country’s biggest vehicle market, and more than a dozen states copy its emissions standards.

     Theoretically, the grid should be able to handle it, according to a Quartz article (link). Electricity supply and demand work in a reinforcing feedback loop: As demand grows, it creates an incentive for utilities and power companies to invest in new generation and transmission infrastructure. And EVs may be easier to accommodate since they don’t need to be charged at times of peak demand.

     The bigger bottleneck could be the rollout of charging stations and the development of new bureaucratic systems to manage the flow of electrons between so many new distributed sources of supply (solar) and demand (EVs).

— How deadly bacteria spread in a Similac factory — and cause the U.S. formula shortage. Bloomberg Businessweek has an in-depth article on the topic (link). It begins: “About 20% of the infant formula produced in the U.S. comes from a plant on the edge of the city of Sturgis, in southern Michigan, where it’s been a presence for more than five decades. It’s owned by Abbott Laboratories and makes Similac, the country’s most popular brand. On a September morning in 2021, two U.S. Food and Drug Administration investigators arrived for an annual inspection that was a year overdue because of the agency’s Covid-19 restrictions. When they reviewed company records, they saw evidence of Cronobacter sakazakii, bacteria that can survive for months, sometimes years, in powdered formula and cause devastating illness in infants.”

     Meanwhile, Abbott will restart production of its Similac baby formula. The reopening of a Michigan plant that had been shut in February over contamination concerns is meant to ease a U.S. shortage of baby formula. But Abbott warned that there could be production stops and starts “from time to time.”

— U.S. food and beverage companies are racing to keep operations running during a nationwide shortage of carbon dioxide. Companies including Tyson Foods and Kraft Heinz have been searching for the gas with more urgency, the Wall Street Journal reports (link), after supply disruptions this summer exacerbated existing shortages, threatening production of goods from cold cuts to beer. It’s one of the results of pandemic-driven shifts in industrial output that are continuing to reverberate across supply chains for key raw materials. Officials say shortages have grown acute in parts of the country and that supplies will remain tight this fall.  Meatpacking giant Tyson said in recent correspondence to suppliers that it was in an emergency state and needed help closing gaps in its carbon-dioxide supplies across plants in 10 U.S. locations. Kraft notified retailers in August of disruptions to the company’s meat supplies, citing “severely constrained” carbon-dioxide supplies and other issues. “We have a very big need and anything would be greatly appreciated,” Tyson Foods wrote in an email to carbon-dioxide suppliers.

— Summary:

• Global Covid-19 cases at 601,007,628 with 6,648,632 deaths.
• U.S. case count is at 94,190,979 with 1,043,840 deaths.
• Johns Hopkins University Coronavirus Resource Center says there have been 604,654,574 doses administered, 223,914,723 have been fully vaccinated, or 67.96% of the U.S. population.

— Moderna, an American pharmaceutical company, sued its rival, Pfizer, and its German collaborator BioNTech over alleged patent infringement while developing their covid-19 vaccine, the first in the world. Moderna said that the companies infringed on patents filed between 2010 and 2016 covering innovative mRNA technology; it clarified that it was not seeking to block the Pfizer-BioNTech vaccine from the market.

— The federal government is ending its free at-home Covid-19 test program this week. The program, which provided up to 16 free tests per household since the beginning of the year, will be suspended Friday due to a lack of funding and efforts to preserve supply ahead of an anticipated fall surge in cases, a White House official told CNN.

— Election update:

• Jaime Harrison, chair of the Democratic National Committee, predicted Sunday that the midterms will see Democrats gain seats in the U.S. Senate, pick up some governors’ mansions and hold onto their majority in the House of Representatives. “That momentum is real,” he said on CBS’s Face the Nation news show.
• Maryland Gov. Larry Hogan, a moderate Republican, said he fears the GOP will fail to retake the Senate or pick up gubernatorial seats, though he still thinks the party will win the House. “This should be a really huge year for Republicans just because of the failures of the Democrats who are in control of everything and Biden’s low approval ratings,” Hogan said on CBS. “But we could blow it by nominating unelectable people — and that’s exactly what’s happening across the country and why the wave is going to be more of a ripple rather than a tidal wave.”
• “The party in power typically doesn’t improve its electoral prospects in the final months of a midterm, but that’s where we appear to be,” Nathan Gonzales and Jacob Rubashkin of Inside Elections, a nonpartisan election watcher, wrote in a report.
• The Cook Political Report with Amy Walter lowered its projection for GOP pickups to a range of 10-20 seats, down from 15-30 seats previously. The report said it couldn’t rule out the possibility that Democrats retain their majority, citing elevated Democratic turnout.
• But… The predictions of pollsters and election watchers in recent years have led to some glaring misses. And history shows some pollsters doing what they have sometimes done during late summer in Senate election years: noting Republican gains may be less than expected or worse. In some years, that lead to donor and voter fatigue among Republicans, but GOP campaign officials say that will not be the case this time.

— Beto O’Rourke said he has a bacterial infection and will be taking a break from the Texas gubernatorial campaign trail. After going to the hospital Friday, O’Rourke is now recuperating at home and said his symptoms are improving. Link for details via the Texas Tribune.

— Truth Social faces financial peril as worry about Trump’s future grows. Former president Donald Trump’s social media company is facing financial doubts, puny traffic and fears of further trouble if his popularity falls. Link to WaPo article.

— Sen. Roy Blunt (R-Mo.) on whether Trump should have taken the documents to Mar-a-Lago, on ABC’s This Week: “What I wonder about is why this could go on for almost two years, and less than 100 days before the election suddenly we’re talking about this rather than the economy … I understand he turned over a lot of documents. He should have turned over all of them. I imagine he knows that very well now as well.” Meanwhile, the Biden Administration acknowledged it’s conducting a review into the damage caused by former President Trump’s storage of classified documents at Mar-A-Lago that’s separate from the Justice Department investigation.

— 'Insulting': Gov. Sununu calls on Biden to apologize for 'semi-fascism' comment. President Joe Biden should apologize for comparing the philosophy of Republicans loyal to former President Donald Trump to "semi-fascism," according to a Republican governor. Gov. Chris Sununu (R-N.H.), who has also been critical of Trump, defended the "MAGA" wing of the party by denouncing Biden's remarks at a Democratic Party fundraiser last week during an interview with CNN's State of the Union on Sunday. "I mean, the fact that the president would go out and just insult half of America, because, effectively, half of America votes Republican, half of America ultimately votes Democrat — it swings a little bit one way or the other, but effectively, call half of America semi-fascist, because he's trying to stir up controversy, he's trying to stir up this anti-Republican sentiment right before the election, it's just — it's horribly inappropriate," Sununu said. "It's insulting. And people should be insulted by it. And he should apologize." When asked whether there are elements of fascism within the Republican Party, Sununu said there are "elements of fascism and white supremacy all in America." He also said the same could falsely be said about Democrats, but substituting "communist" for fascist.

— Top House Intelligence Republican wants proof of Trump declassification order. Former President Donald Trump needs to show evidence that he declassified records found at his Mar-a-Lago resort, a top House Republican said on Sunday. Rep. Mike Turner (R-Ohio), the ranking member of the Intelligence Committee, was asked point-blank by Fox News host Maria Bartiromo whether the documents, which have raised national security concerns, were declassified, as Trump and his allies claim. "This is going to be a fact-based issue. Certainly, there's going to have to be some substantiation of this," the congressman said on Sunday Morning Futures, adding that "no one is questioning that President Trump had full authority to do that as president. The question is going to be, how can they document that it occurred?"

— Department of Justice unsealed the affidavit that authorized the search of Donald Trump’s Mar-a-Lago estate earlier this month. The heavily redacted version, written by an FBI special agent, claimed there was “probable cause” to believe that the former president had not returned additional classified documents, and that “evidence of obstruction” would be found at his home.

— U.S. Justice Department is in the early stages of drafting possible antitrust suit against Apple: Politico, who cited a person with direct knowledge of the matter.

— EPA proposes designating two ‘forever chemicals’ as hazardous. The Environmental Protection Agency (EPA) announced it plans to designate two types of “forever chemicals” as hazardous substances, to expand cleanup efforts and ensure accountability for polluters. The agency is proposing adding two new chemicals — known as “PFOA” and “PFOS” – to its list of hazardous substances under the Superfund regulations, a move it plans to make official in the next several weeks. The proposed rule would then be opened to a 60-day public comment period before taking effect. Link to EPA statement for details.

— New Arctic pivot? The United States has announced plans to appoint an Arctic ambassador, just days after NATO Secretary General Jens Stoltenberg warned of a “significant Russian military buildup” in the region and pointed towards deepening Russian/Chinese ties. “Beijing and Moscow have also pledged to intensify practical operation in the Arctic,” Stoltenberg said. “This forms part of the deepening strategic partnership that challenges our values and our interests.”

— For the first time in Gallup polling, more Americans (16%) said they smoke marijuana than had smoked a tobacco cigarette in the past week (11%).

— Fuel leak interrupts launch countdown of NASA moon rocket. The next launch attempt wouldn’t be until Friday at the earliest. The huge Space Launch System rocket was set to lift off from the Kennedy Space Center in Florida, in the first flight for NASA’s Artemis program and the space agency’s first in 50 years of a vehicle capable of carrying humans to the Moon within two years.

— How some mothers lost $12.6 million… by throwing away a key baseball card. A 1952 Mickey Mantle baseball card sold for $12.6 million — the most valuable piece of sports memorabilia ever sold at auction. The collectible, purchased for $50,000 in 1991, was a home-run investment.

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