CPI: Annual Inflation Rate Eases to 6% as Debate Continues on Fed’s Next Rate Move

Big China buy of U.S. corn | Food price inflation continues | Smithfield CEO talks China
 

USDA daily export sale: 612,000 tonnes of corn to China during the 2022-23 marketing year.

The annual inflation rate in the U.S. reached 6% in February of 2023, slowing for an eighth straight month, and marking the lowest level since September of 2021. The reading came in line with market forecasts, and compares to 6.4% in January. A slowdown was seen in food prices (9.5% vs 10.1%) while the cost of used cars and trucks continued to decline (-13.6% vs -11.6%). Also, energy prices rose less (5.2% vs 8.7%), with gasoline prices falling 2%, after a 1.5% rise in January. Fuel oil cost also slowed sharply (9.2% vs 27.7%) but electricity rose faster (12.9% vs 11.9%). Meanwhile, cost of shelter accelerated further (8.1% vs 7.9%).

Core inflation which strips out cost of food and energy edged lower to 5.5% from 5.6%. Economists view core prices as a better indicator of future inflation.

Compared to the previous month, the CPI rose 0.4%, following a prior 0.5% gain and matching forecasts. The core rate however, edged higher to 0.5% from 0.4%, compared to forecasts of 0.4%. Inflation in the US remains three times above the Fed's target of 2%.

U.S. food prices are still up 9.5% from a year ago. A few items (more on food price inflation in graphics below):

     Eggs up 55.4% | Fish 4.6% | Meat 1.8% | Milk 8,1% | Fruits & Veggies 5.3%

“The Fed still has more work to do” to bring inflation back to near its 2% target, said Michael Gapen, chief U.S. economist for Bank of America. “If the Fed is successful at corralling the recent market volatility and ringfencing the traditional banking sector, then it should be able to continue its gradual pace of rate hikes until monetary policy is sufficiently restrictive.”

Further signs of cooling have emerged. Economists estimate that retail spending declined in February. The Commerce Department will release new consumer data on Wednesday.

Fed Chair Jerome Powell announced on Monday that the central bank would launch a review into what went wrong at SVB. He will have a lot to read about that early because so many financial writers have already written about the topic, of course after it occurred. Powell and others will likely come to the same conclusion: borrowing short while lending long went bad. SVB sold $21 billion worth of bonds that led to a $1.8 billion loss. That warning, coupled with the bank needing to raise money, spooked markets.

Many Republicans, like Tim Scott of South Carolina, a top Senate Banking Committee member, say that regulators missed the risks and want to question officials at the Fed and at the Federal Deposit Insurance Corporation (FDIC). But Sen. Elizabeth Warren (D-Mass.) wants answers from Greg Becker, SVB’s former CEO. Becker sold $3.6 million in company stock just days before the bank’s collapse. Pressure from federal lawmakers is mounting to give it back. A personal acquaintance, Democratic California Rep. Ro Khanna said Sunday that Becker should give that money back. “There should be a clawback of any of that money,” Khanna said in an interview with The Washington Post. “It should be going to the depositors.” Khanna represents the district where Silicon Valley Bank was headquartered

Sen. Warren wants to know whom SVB’s Becker met in Washington and when. She has followed up a call for tighter regulations by demanding that Becker detail his efforts to “roll back regulations,” according to a new letter (link). “You lobbied for weaker rules, got what you wanted, and used this opportunity to abdicate your basic responsibilities to your clients and the public — facilitating a near-economic disaster,” Warren writes. She wants to know how much time and money was spent on their lobbying effort and who approved the moves inside the bank.

The Wall Street Journal had a revealing interview with Smithfield Food’s CEO. More in Livestock section. 

The biggest farm bill issue, food stamps, is front and center with the unveiling of dueling measures. More in Policy section. 

Volkswagen plans $192 billion investment focusing on EVs, new tech. CEO Oliver Blume boosts long-term investment to target emerging ‘profit pools,’ new tech.

President Biden is set to unveil an executive order designed to step up FBI background checks of would-be gun buyers.

Sen. Mitch McConnell (R-Ky.) released from hospital but will enter rehabilitation facility.

Uber and Lyft score a big win in a California court. A state appeals court upheld Proposition 22, which found that the ride-hailing businesses can classify drivers as independent contractors rather than as employees. But several drivers and a union are expected to appeal the matter to the California Supreme Court.

A rapidly intensifying Nor'easter will bring heavy snow, winds and coastal flooding today across the U.S. Northeast, threatening widespread power outages and making travel impossible in some areas. A Nor'easter is a storm that travels along the U.S. East Coast and typically has coastal winds out of the northeast. They typically form between September and April and are strongest during the winter months. Ahead of today's anticipated conditions, more than 20 million people are under winter weather alerts across the region. Several governors have implemented pre-emptive measures as forecasts show widespread snowfall up to 18 inches is likely from northeastern Pennsylvania and far northwestern New Jersey through much of upstate New York and New England.

Equities today: Global stock markets were mostly lower overnight. U.S. Dow opened up 300 points higher and is currently around 400 points higher. U.S. equities are higher and yields are bouncing globally following better than expected economic data overnight and more stable price action in U.S. bank shares while traders continue to unwind hawkish Fed policy bets following this morning’s CPI report. See details of that report below. In Asia, Japan -2.2%. Hong Kong -2.3%. China -0.7%. India -0.6%. In Europe, at midday, London -0.2%. Paris +0.2%. Frankfurt +0.5%.

     U.S. equities yesterday: The Dow and S&P 500 ended with losses while the Nasdaq rose after a volatile trading session. The Dow declined 90.50 points, 0.28%, at 31,819.14. The Nasdaq was up 49.96 points, 0.45%, at 11,188.84. The S&P 500 was down down 5.83 points, 0.15%, at 3,855.76.

     Regional bank stocks took a huge hit Monday as the government’s actions to limit the fallout from Silicon Valley Bank and Signature did not reassure many investors and depositors. First Republic fell a 62% on Monday. Shares in regional banks were up in premarket trading today. Shares in First Republic, Western Alliance and PacWest were all up by double digits today. “Americans can rest assured that our banking system is safe — your deposits are safe,” President Biden said yesterday. Still, there’s cause for concern as Moody’s warned that it may downgrade the credit ratings of First Republic and five other lenders.

Agriculture markets yesterday:

• Corn: May corn fell 3 3/4 cents to $6.13 1/2, posting a mid-range close.  
• Soy complex: May soybeans closed 15 3/4 cents lower at $14.91 1/4, on the session low. May soybean meal closed $6.60 lower at $479.30, also on the session lows. May soyoil settled 75 points lower at 55.86 cents.
• Wheat: May SRW wheat rose 5 1/4 cents at $6.84 1/2. May HRW wheat gained 2 1/4 cents at $8.00 1/2. Prices closed nearer the session highs and saw short covering after hitting contract lows last Friday. Spring wheat futures rose 8 cents to settle at $8.32 2/4.
• Cotton: May cotton rose 300 points to 81.18 cents, after reaching the lowest level since late November overnight.
• Cattle: April live cattle closed down 72 1/2 cents to $163.55. Prices hit a five-week low early on and then closed nearer the session high. May feeder cattle closed down $1.175 at $202.40 and nearer the session high.  
• Hogs: April lean hog futures sold $1.225 lower to $86.225, posting a mid-range close.
   

Ag markets today: Corn and soybeans faced followthrough selling overnight, while the wheat market pulled back from Monday’s corrective gains. As of 7:30 a.m. ET, corn futures were trading mostly around 2 cents lower, soybeans were 2 to 3 cents lower, SRW and HRS wheat were 5 to 7 cents lower and HRW wheat was 2 to 4 cents lower. Front-month crude oil futures were around $1.50 lower, and the U.S. dollar index was about 175 points higher.

Technical viewpoints from Jim Wyckoff:

On tap today:

     • Labor Department released its consumer price index report for February. We have previously detailed highlights from the report.
     • China's retail sales, industrial output and fixed-asset investment reports for the January-February period are due out at 10 p.m. ET.
     • President Biden is scheduled to depart San Diego at 2 p.m. ET en route to Monterrey Park, Calif., where he is set to deliver remarks on efforts to reduce gun violence at 3:45 p.m. He will depart at 7:10 p.m. en route to Las Vegas, where he will participate in a Democratic National Committee reception at 10 p.m. ET.

Fed fund futures and March 21-22 FOMC confab. The CPI data has put up healthy gains for equities in early trading and have also boosted the odds for a 25-basis-point increase to over 85% according to CME Fed funds futures with no-change probabilities now under 15%. For the May rate-setting meeting, analysts see central bankers pausing on increases altogether, and cutting in June.

Is the Fed really going to turn that dovish? At least five separate times since the start of the bear market in 2022, investors have been overaggressive in assuming the Fed is going to get less hawkish, and that’s led to head fake rallies multiple times throughout 2022 and most recently in early 2023. The Sevens Report thinks it is happening again. Why?

1. “Inflation is still much, much too high for the Fed to declare hikes are over. Head-line CPI will likely print over 6% today and core CPI, which should be 2%, will print in the mid-5% range today.
2. Disinflation stalled in February, as virtually every major global inflation metric either 1) Declined only slightly or 2) Bounced back from previous declines. That implies inflation is more entrenched than the Fed would like.
3. Core services inflation, which is the inflation target for the Fed, is showing virtually no signs of falling and with the labor market still very tight, it’s not likely it will fall anytime soon.
4. If the bank crisis is limited to just a few banks, then the actions taken on Sunday by the Fed and Treasury will prove inflationary. First, by backstopping the depositors the government has avoided the lion’s share of economic loss from this crisis, and as such it won’t weigh materially on aggregate growth. Second, the BTFP, if it’s utilized, will increase the Fed’s balance sheet at a time when it is actively trying to shrink its balance sheet via Quantitative Tightening! The whole point of QT is to let bonds roll off the Fed’s balance sheet and absorb the excess liquidity in the system. The BTFP would reverse that process (at least partially).”
   
   Upshot, according to the Sevens Report: The financial letter is “not trying to downplay the threat from the banking crisis, and if the Fed deems this is dangerous enough, they will stop hiking rates because they don’t want a crisis to cause a sudden and intense slowdown in the economy. But amidst this sudden surge of dovish expectations if the fallout from this regional bank stress is contained, then it’s entirely possible this episode results in, ultimately, higher rates for longer because it’ll be inflationary (which is the opposite of what the bond market is signaling).”
    

Morgan Stanley: SVB a ‘battle between fire and ice’ with inflation. The collapse of Silicon Valley Bank (SVB) and the market turmoil it unleashed is part of the “battle between fire and ice” in global efforts to curb inflation after years of cheap money, Morgan Stanley co-president Edward Pick said. “This is part of the process of the knob being turned to tighten financial conditions to make sure that we are on our way to normalizing a higher interest rate world,” Pick said. “But there might well be surprises, there might well be reactions,” he said, adding the market was around halfway through a fight to “slay inflation” that would be waged over 12 to 18 months.

The fear of further instability to the banking sector now trumps inflation. Nomura’s North America economists, led by Aichi Amemiya and Jacob Meyer, cut their prediction of a half-point rate increase to a 0.25% decrease. They see the Fed halting quantitative tightening, or the policy of selling off its stash of Treasury bonds and other securities. The moves, they say, are needed “to reduce the risk of further bank runs.”

     Analysts and economists at RBC Capital Markets, Goldman Sachs and Deutsche Bank also view a rate increase as harmful to those banks with stretched balance sheets. Increases, they say, would set off further market volatility.

Worries about moral hazard have returned. Critics of the federal rescue plan warn that banks, emboldened by measures that essentially guarantee their deposits, may start taking on unnecessary risk. “Every time this happens, it increases the potential for moral hazard going forward,” Patricia McCoy, a professor at Boston College Law School, told the New York Times.

     And investors appear willing to wade into riskier assets again. Consider this: Cryptocurrencies soared yesterday, with Bitcoin alone up 10%. (Depositors of Silicon Valley Bank and Signature Bank, many of which were crypto businesses and investors, were made whole.)

     Big vs small. Big banks are still being inundated with customers wanting to transfer funds from smaller lenders.

Food price inflation update.

Market perspectives:

     • Outside markets: The U.S. dollar index is firmer after a steep two-session downdraft. The U.S. Treasury market has stabilized. The yield on the 10-year US Treasury note was higher, around 3.65%, with a mixed tone in global government bond yields. Crude oil futures were under renewed pressure, with U.S. crude around $73.05 per barrel and Brent around $7920 per barrel. Gold and silver were under pressure with gold around $1,913 per troy ounce and silver around $21.74 per troy ounce.

     • Ag trade: South Korea purchased 135,000 MT of optional origin corn. Algeria purchased around 540,000 MT of wheat expected to be mostly sourced from the Black Sea region and tendered to buy 35,000 MT of Argentine corn. Japan is seeking 73,518 MT of milling wheat in its weekly tender.

     • NWS weather outlook: There is a High Risk of excessive rainfall over parts of Central/Southern California... ...Heavy snow over parts of the Northeast and the highest elevations of the Sierra Nevada and the Northern/Central Rockies... ...A Nor’easter will develop along the Northeast Coast.

Items in Pro Farmer's First Thing Today include:

     • Weaker grain market tone overnight
     • Consultant takes bigger cut out of Argentine crop estimates
     • Japan to raise domestic wheat price 5.8%
     • Cattle futures extend discount to cash market
     • Pork cutout firms

— Gov. Ron DeSantis of Florida said protecting Ukraine was not a key U.S. interest, breaking with fellow Republicans.

• Ukraine’s forces continued to defend the embattled eastern city of Bakhmut. Despite calls by several Western officials and some Ukrainian commanders to pull back to preserve combat forces needed for a spring offensive and to avoid potential encirclement, Ukrainian President Volodymyr Zelenskyy last week doubled down on the strategy of holding Bakhmut. He said that the commanders of Ukrainian armed forces and ground forces have recommended that they keep fighting for the city.
• China leader Xi Jinping plans to speak with Zelenskyy, likely after the Chinese leader visits Moscow next week.
• The Pentagon unveiled plans to boost spending on munitions to deter China and backfill supplies sent to Ukraine. The fiscal 2024 budget request includes a 12% rise to $30.6 billion in spending on missiles and rockets and the factories to build them in an effort to catch up on years of deferred purchases, though defense contractors are still struggling to match the extra demand.
• Russia was able to save abroad about a third of the $227 billion windfall earned last year from its commodity exports, creating a potential new flashpoint as the U.S. and its allies look to tighten their sanctions. “Due to Europe’s delay with targeting Russia’s energy sector, the Kremlin was able to accumulate one of the largest current-account surpluses in its history,” said Maria Shagina, an economist at the U.K.-based International Institute for Strategic Studies. “This has de facto negated the effect of freezing the central bank assets in March 2022, as Russia could recoup what it lost.”
   

— Very little change, again, in USDA aid payments. Payouts under USDA aid efforts increased slightly over the past week, with data as of March 12 indicating that Emergency Relief Program (ERP) payments were essentially unchanged at $7.41 billion for total payments, which include $6.29 billion for non-specialty crops and $1.12 billion for specialty crops under Phase 1 of the effort, with a single Phase 2 payment of $2,000 listed.

     For the Coronavirus Food Assistance Program 1 (CFAP 1), USDA data shows total payments at $11.83 billion, up from $11.82 billion the prior week, even though the breakdown of original CFAP 1 payments remained at $10.63 billion and top-up payments at $1.19 billion. CFAP 2 payouts were shown steady with the prior week at $19.44 billion for total payments, including $14.53 billion in original CFAP 2 payments and $4.91 billion in top-up payments.

— The new farm bill debate as truly begun with differing food stamp measure offered. Nearly three dozen House Democrats introduced a bill to end the three-month limit on SNAP benefits for so-called ABAWDs, able-bodied adults ages 18-49 without dependents. "Research finds that relinquishing access to SNAP benefits only forces people into hunger, not job security," said Rep. Barbara Lee (D-Calif.), a lead sponsor of the legislation.

     Meanwhile, Rep. Dusty Johnson (R-S.D.) filed a bill today to expand the coverage of the ABAWD work limit to age 65 and end the use of waivers in areas with insufficient jobs, reported Politico (link), which obtained a copy of the bill ahead of its official introduction. Former President Donald Trump previously proposed raising the age ceiling to 62. "Essentially, this is a time limit — which disproportionately affects people of color — that takes SNAP away when people aren't working, withholding food as a punishment for not having a stable job," the Center on Budget and Policy Priorities notes. "These guys talk about states' rights all the time, except when it comes to poor people," Rep. Jim McGovern (D-Mass.) said in response to the GOP bill.

     Comments: If the House can get a new farm bill, whenever it comes, current House Ag Chairman G.T. Thompson (R-Pa.) must not get most Democrats upset about what will eventually be the Republicans final stance on this “third rail” of the farm bill: food stamps. All Thompson has to do is review what’s happened with Democrats are upset on this issue: they defeated farm bill attempts on the House floor.

— President Biden to announce an executive order aimed at reducing gun violence. Under the new order, Biden will direct the Justice Department to step up FBI background checks of would-be gun buyers and take steps to ensure firearms dealers who have had their licenses revoked can’t continue to sell guns, senior administration officials said. The White House said Biden’s actions are designed to move the U.S. “as close to universal background checks as possible” without the passage of legislation in Congress, where partisan divides have stalled most gun-safety legislation.

— EPA proposes first standards to make drinking water safer from ‘forever chemicals’. The Environmental Protection Agency today proposed a new rule that would set the first national drinking water standard for “forever chemicals” that are dangerous to human health. The move could radically affect drinking water for nearly everyone in the United States. The new rule would set the first national drinking water standard for six per- and polyfluoroalkyl substances, also known as PFAS or “forever chemicals.” PFAS are a family of ubiquitous synthetic chemicals that linger in the environment and the human body, where they can cause serious health problems.

— Senate vote today on Treasury deputy undersecretary. The Senate late this afternoon will vote on the motion to invoke cloture, or limit debate, on Brent Neiman’s nomination to be a deputy undersecretary at the Treasury Department for international finance and development. Republican Sens. Mike Crapo (Idaho), Chuck Grassley (Iowa), and Todd Young (Ind.) already supported his nomination in the Finance Committee.  

— Silicon Valley Bank’s collapse hastens unravelling of long-standing ties between U.S. venture capital and China’s technology start-ups. A commentary item says the likely impact of the U.S. lender’s collapse is that China’s tech elite will look to banks in Hong Kong, Singapore and even Europe. Link for more via the South China Morning Post.

     Some of them are turning to bigger U.S. banks, while a few Chinese lenders such as China Merchants Bank and the Industrial & Commercial Bank of China are also rushing to fill the gap.

— Washington Post: Biden seeks tension-easing call with China’s Xi Jinping. With relations frosty in the wake of spy balloon controversy and with allies’ plan to outfit Australia with nuclear submarines, the U.S. president looks to dial down tensions with Beijing. Link to more via the WaPo.

— China seeks larger grain output. China's "support of grain production will only increase" and the government will beef up production through a focus on arable lands and seeds to assure self-sufficiency in food, said Premier Li Qiang. Link for more from China Daily.

— China removes all remaining curbs on Australian coal imports. China will allow all domestic companies to import Australian coal, signaling an end to trade restrictions imposed in late 2020.

— China’s provinces are increasingly reliant on Beijing for money. China’s local governments are growing increasingly reliant on money transferred from Beijing to pay for public services, as a drop in tax revenue and jump in Covid Zero costs pushed them further into the red last year.

— Sound familiar? China is planning to raise its retirement age gradually and in phases to cope with the country's rapidly aging population, the state-backed Global Times said on Tuesday, citing a senior expert from China's Ministry of Human Resources.

— Key House Republican dealing with trade wants the Biden administration to change tack on its approach to the issue. Rep. Adrian Smith (R-Neb.), who leads the House Ways and Means Committee trade subcommittee, favors the pursuit of traditional free-trade pacts over the current approach — which prioritizes initiatives that don’t require congressional approval, such as the Indo-Pacific Economic Framework. “History would show that labor and environmental issues have been elevated because of trade agreements, and it would be a lost opportunity if we just sit on the sidelines and watch other countries engage while the playing field continues to tilt against us,” Smith said in an interview with Bloomberg (link).

     The Biden team argues that frameworks are better and faster for meeting current challenges than deals that involve broad tariff negotiations and can take years. The U.S. has launched an investment partnership with Kenya and a trade dialogue with the U.K. that seek non-tariff ways to facilitate trade.

     Smith counters that traditional free-trade pacts create more opportunities for American companies, better strengthen supply chains and are necessary for keeping up with other nations who are negotiating their own deals without the U.S. He plans to press Trade Representative Katherine Tai on the issue in a full Ways and Means Committee hearing later this month, he said.

     USTR counters. Last year, the U.S. launched trade negotiations with Taiwan and countries in the Americas, continued discussions with the European Union on a global steel and aluminum arrangement, said Sam Michel, a spokesman for the agency. This was besides work in the Indo-Pacific and Kenya. “We opened up new markets for our agricultural producers, which will bring US products to customers around the world,” he said. “Some may not agree with our agenda, but Ambassador Tai’s approach puts the focus back on American workers to ensure they benefit from our trade policies.”

— A big LNG lift off. Venture Global LNG announced a final decision to go ahead with the second phase of a huge liquefied natural gas export project in Louisiana, after it secured $7.8 billion in financing. The big expansion of the Plaquemines export facility is under construction on the Gulf Coast. Its total cost is now expected to be $21 billion. It will have the capacity to turn about 2.6bn cubic feet a day, or 2.5% of the country’s gas output, into 20 million tonnes a year of LNG for exports. Once online, it will be among the biggest LNG export plants in the world. The project's $21 billion price tag is the largest project financing done in the industry, and analysts predict the first phase of the project could begin producing LNG by next year.

— Minnesota wants to leapfrog California in being a climate hawk state. The Minnesota Legislature wants to pass legislation aimed at curbing carbon pollution from transportation, the state’s largest source of greenhouse gas emissions. The bill would establish the most aggressive clean transportation standard in the country and the first in the Midwest. The Minnesota standard would require a reduction in the carbon intensity of transportation fuels by 25% below 2018 levels by 2030, 75% by 2040, and 100% by 2050. The measure cleared the Minnesota Senate State and Local Government and Veterans Committee on Friday. It now heads to the Minnesota Senate Environment, Climate and Legacy Committee.

     There is growing support from a diverse coalition that includes electric vehicle charging companies, environmental groups and biofuel producers.

     But some conservation groups have raised concerns about the bill’s incentives for renewable natural gas made from cow manure, saying they could expand livestock operations in the state, according to the Washington Post. Backers have sought to address these concerns by noting that “expanded feedlots are really being driven by broader trends in the agricultural sector,” said Brendan Jordan, vice president for transportation and fuels at the Great Plains Institute, a Minneapolis-based nonprofit organization that supports the bill. Still, Jordan said it’s “too early to tell” whether the measure will pass before the legislative session ends in late May.

— Corteva, Bunge and Chevron unveil joint venture on canola for biofuel feedstock deal. Corteva Inc., Bunge and Chevron USA announced a commercial collaboration for proprietary winter canola hybrids that produce plant-based oil with a lower carbon profile to produce vegoil for use in renewable fuels with a lower carbon footprint.

     Bunge Chevron Renewables intends to contract with growers to buy the winter canola crop under a double-cropping system in the southern U.S.

     The “proprietary winter canola hybrids from Corteva can be used in a double-crop system, following soybeans or cotton,” a release from the companies said.

     A pilot program was expected to be conducted in the 2022-23 growing season to “fine-tune best management practices.” The companies said putting winter canola into a crop rotation “provides a cover crop which can enhance soil health by holding more nutrients, water, and carbon in the soil.”

     The release does not indicate how many acres the effort is expected to attract.

— Volkswagen plans to increase investments in electric-vehicle production. The German auto giant announced a $193 billion spending plan over the next five years, a vast majority of which was earmarked for “electrification and digitalization.” It is hoping to capitalize on a 26% rise in electric vehicle deliveries last year.

   Volkswagen AG will build its first overseas gigafactory for battery cell manufacturing in Canada, the largest automotive industrial complex in the country, with production planned for 2027. The company said Canada provides a local supply of raw materials and access to clean energy, as the country has seen at least 10 major EV-related commitments in the past two years totaling more than $16 billion Canadian ($12 billion). Link for more via the AP.

— PETA invokes bird flu in renewed call for White House to not use real eggs for the Easter egg roll. People for the Ethical Treatment of Animals (PETA) has issued their annual call for the White House not to use real eggs in their Easter egg roll, but this year they are invoking bird flu as a reason. The group called on First Lady Jill Biden to use plastic or wooden eggs or even painted rocks “while families are shelling out nearly 70% more for eggs amid the deadliest avian flu outbreak on record,” and so the event does not “prop up the cruel egg industry.” PETA has for years advocated that the event not use real eggs.

— Smithfield Foods CEO defends pork producer’s Chinese ownership. Shane Smith points to sales growth since China’s WH Group acquired the Virginia company. The comments come following growing concerns from lawmakers over Chinese control of U.S. agriculture. “We’re as American today as we were in 2013,” he said during an interview cited by the Wall Street Journal (link) at his office overlooking Virginia’s Pagan River. “When you meet with politicians and have those discussions, they seem to understand that.”

     WH’s ownership has helped Smithfield weather an industrywide decline in exports to China and ship more pork products overseas, said Smith. Pork companies mainly export the head, feet and other byproducts of the pig. “We’ve been able to collaborate on things like introducing an American-style bacon into China,” he said. “It’s been a really successful relationship.”

     Of note: Smith said Smithfield has discussed contingency plans in the event China escalates efforts to absorb Taiwan, a concern among U.S. leaders.

     Some lawmakers have called for a ban on Chinese purchases of U.S. farmland. Roughly half of the approximately 350,000 acres of U.S. farmland owned by Chinese entities is represented by Smithfield’s more than 400 company-owned hog farms and 43 plants, according to federal data.

— $670 million-plus price tag for fighting bird flu outbreaks. USDA has spent more than $670 million to contain highly pathogenic avian influenza (HPAI) and to indemnify owners for their losses, the Animal and Plant Health Inspection Service told Ag Insider. Outlays included more $414 million in compensation for “depopulated” birds and eggs, $142 million to cull flocks, dispose of dead birds and activities to kill the virus and $114 million in personnel, state agreements and field costs.

— Jiang Yanyong, who helped expose China’s SARS crisis, dies at 91. A retired military surgeon, he blew the whistle in 2003 on Beijing’s cover-up of the epidemic. He was later punished for denouncing the Tiananmen Square crackdown. Link for details via NYT.

— Pfizer agrees to buy the cancer treatment specialist Seagen for $43 billion. The acquisition is the largest deal in the pharmaceutical sector since AbbVie agreed to buy Allergan for $63 billion in 2019. Some observers say it is a sign that drugmakers are willing to pursue megadeals despite closer scrutiny by antitrust regulators.

     Also on Monday, French drugmaker Sanofi said it would buy Provention Bio, which sells diabetes treatment Tzield, in a deal valued at $2.9 billion.

— The Justice Department sued Rite Aid, accusing the pharmacy chain of filling opioid prescriptions that lacked a legitimate medical purpose. The Department of Justice alleged Rite Aid repeatedly filled prescriptions  that were medically unnecessary, for off-label use or not issued in the usual course of professional practice between 2014 to 2019, according to a complaint filed in federal court. Rite Aid pharmacists were accused of ignoring obvious signs of misuse, including in prescriptions for "trinities," a combination of opioids, benzodiazepine, and muscle relaxants preferred by drug abusers for their increased euphoric effect, the complaint states. The Justice Department has also sued Walmart and drug distributor AmerisourceBergen Corp over their alleged roles in the nation's opioid crisis.

— Novo Nordisk plans to cut insulin prices by up to 75%, following Eli Lilly amid pressure to curb diabetes treatment costs.

— The Johns Hopkins Covid-19 map was viewed more than 2.5 billion times. Now it’s done. Link for details.

— Donald Trump and Ron DeSantis are focusing on education and cultural matters in the race for Republican voters. The issues have gained in importance in GOP politics, standing aside a longstanding emphasis on immigration and crime, the WSJ reports (link). Questions surrounding how issues related to race and sexuality should be taught have triggered fights at school boards and state capitals, and gotten Republicans attention from voters.

— House Democrats' main super PAC is launching an outpost in New York as part of an effort to recapture seats lost to Republicans in the 2022 midterms. Link to more via Axios.

— Sen. McConnell continues to recover from a fall last week. Sen. Mitch McConnell (R-Ky.) was discharged from a Washington-area hospital after undergoing treatment for a concussion suffered last week, but he will continue inpatient care at a facility before returning home, his spokesman said. “Leader McConnell’s concussion recovery is proceeding well and the Leader was discharged from the hospital today,” David Popp said in a statement yesterday. “At the advice of his physician, the next step will be a period of physical therapy at an inpatient rehabilitation facility before he returns home.” Popp added that over the weekend McConnell’s doctors discovered that he also suffered a “minor rib fracture” in a fall at a fundraising event.
 

— Uber drivers are contractors: California court. A state appeals court upheld Proposition 22, a California ballot measure that classifies Uber and Lyft drivers as independent contractors rather than employees. The decision overturned a lower court’s ruling voiding the law. But the legal battle over the status of hundreds of thousands of gig workers is not over: The Service Employees International Union is expected to appeal the decision to the state’s highest court. Shares of Uber, Lyft and DoorDash all jumped in off-hours trading.

— The Oscars drew nearly 19 million viewers on Sunday — better than last year, but still the third worst showing on record.

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