Details of Around $80 Billion Funding for IRS in Reconciliation Package

Gas prices fall below $4 a gallon, lowest point since March | Update on U.S. tariffs on China

While U.S. inflation decelerated in July by more than expected, reflecting lower energy prices, which may take some pressure off the Federal Reserve to continue aggressively hiking interest rate, two Federal Reserve officials said the softening inflation data does not change the U.S. central bank’s path toward even higher interest rates. See details below.

Wholesale prices fell in July for the first time in two years as a plunge in energy prices slowed the pace of inflation, the Bureau of Labor Statistics reported. The Producer Price Index, which gauges the prices received for final demand products, fell 0.5% from June, the first month-over-month decrease since April 2020, the month after Covid-19 was declared a pandemic. On an annual basis, the index rose 9.8%, the lowest rate since October 2021. That compares to an 11.2% increase in June and the record 11.6% gain in March.

Markets are now betting on a 50 basis points move from the Federal Open Market Committee in September, leading to an interest rate of 3.75% by the year end with cuts to follow in 2023.

Nasdaq has officially climbed more than 20% from its recent low point in June, exiting an approximately five-month-long bear market phase after the consumer price index rose less than expected for July.

USDA daily export sale: 103,400 metric tons of soybean cake and meal for delivery to Mexico during the 2022-2023 marketing year.

Relatively quiet week for U.S. ag export sales to China. USDA’s weekly Export Sales update for the week ended Aug. 4 showed relatively tempered activity for China. Activity reported for 2021-22 included net sales of 3,122 tonnes of corn, net reductions of 1,373 tonnes of sorghum, net reductions of 66,366 tonnes of soybeans, and net reductions of 727 running bales of upland cotton. For 2022-23, exporters reported sales of 195,000 tonnes of soybeans and 9,137 running bales of upland cotton. Sales for delivery in 2022 included 1,836 tonnes of beef and 3,510 tonnes of pork.

Average U.S. gas prices have dropped below $4 a gallon for the first time since March. The national average price for regular gasoline fell to $3.99 a gallon on Thursday, according to AAA. Gas prices hit a record high of $5.02 in June. Despite the 21% drop, they remain 25% higher than this time last year. “Despite steadily falling gas prices during the peak of the summer driving season, fewer drivers fueled up last week,” the AAA said in a release. “It’s another sign that, for now, Americans are changing their driving habits to cope with higher pump prices.” Of note: Gas prices tend to peak in the summer. They usually drop as summer driving season ends around Labor Day.

The International Energy Agency revised up its outlook for global oil supply, partly because Russia has continued to pump more oil than expected. Details below.

Crimea attack opens new front in Ukraine war. Ukraine claims nine Russian warplanes were destroyed on an airbase in Crimea as part of an ambitious attack carried out by Ukrainian special forces, an anonymous official told the Washington Post yesterday. After the attack, Ukrainian President Volodymyr Zelensky said the war must end with the “liberation” of the peninsula, which Russia annexed in 2014. Russia, meanwhile, denied that any aircraft had been damaged and blamed the explosions on a “violation of fire safety requirements.”

Ukrainian forces are preparing for a battle to free the southern city of Kherson. Iran has begun training Russian officials to use its advanced drones, according to the Biden administration.

Finally setting sail after a United Nations-brokered deal reopened ports, Ukrainian grain shipments now face several Russian threats to ships and rampant mold after being blockaded for months. That exacerbates a worsening hunger crisis in the Middle East and Africa, where millions rely on Ukrainian grain. Update in Russia/Ukraine section.

China ended military exercises around Taiwan but reaffirmed its willingness to invade. House Speaker Nancy Pelosi, recently back from the island, said the U.S. won’t let China isolate Taiwan and endorsed the status quo. Pelosi seemed to contradict President Joe Biden’s earlier claim that the military “thinks it’s not a good idea” for her to visit the self-governing island. “I don’t remember them ever telling us not to go,” Pelosi said.

Both Republicans and Democrats are spinning what they think about the around $80 billion for the IRS in the Inflation Reduction Act. We have some key points (including some from a Time magazine account) and discuss how this topic could flare up later this session in the appropriations battle for IRS funding for fiscal year 2023.

U.S. rethinks China tariff strategy. The Biden administration is reconsidering its strategy related to tariffs on Chinese goods in the wake of China’s aggressive response to House Speaker Nancy Pelosi’s visit to Taiwan, Reuters reports. Biden and his team had been considering whether to ditch some existing tariffs, and possibly impose more, but officials set those options aside for now, and Biden has yet to make a decision, according to the report. More on this topic in the Trade Policy section.

Trump takes the Fifth. Donald Trump said yesterday that he refused to answer New York Attorney General Letitia James’s questions in a civil investigation into his real estate business. “I once asked, ‘If you’re innocent, why are you taking the Fifth Amendment?’ Now I know the answer to that question,” the former president said.

An Iranian national planned to assassinate former Trump adviser John Bolton, the U.S. said, describing it as likely retaliation for the 2020 killing of a prominent Iranian general.

Equities today: Global stock markets were mostly flat overnight. U.S. stock indexes are pointed toward firmer openings. In Asia, Japan closed. Hong Kong +2.4%. China +1.6%. India +0.9%. In Europe, at midday, London flat. Paris +0.2%. Frankfurt -0.2%.

     U.S. equities yesterday: The Dow surged 535.10 points, 1.63%, to close at 33,309.51. The S&P 500 gained 87.77 points, 2.13%, to 4,210.24, its highest level since early May. The Nasdaq Composite rose 360.88 points, 2.89%, to 12,854.80 for its best close since late April. The Nasdaq is back in a bull market, having risen more than 20% since mid-June but is still down 18% this year, and was off 32% at its low on June 16.

Agriculture markets yesterday:

• Corn: December corn futures rose 4 1/2 cents to $6.18 1/2, the contract’s highest closing price since July 29.
• Soy complex: November soybeans fell 1 cent to $14.27 3/4 after earlier rising to $14.54 3/4, the highest intraday price since Aug. 1. September soymeal rose 50 cents to $449.60. September soyoil rose 162 points to 67.38 cents, a six-week closing high. Wheat: September SRW wheat rose 18 1/4 cents to $7.99 3/4, the contract’s highest closing price since July 29. September HRW wheat rose 21 cents to $8.72 3/4. September spring wheat gained 13 1/2 cents to $9.06 1/4.
• Cotton: December cotton rose 187 points to 100.94 cents, the highest closing price since June 23.
• Cattle: October live cattle gained $1.30 to $144.475, the contract’s highest closing price since May 4. September feeder futures jumped $2.50 to $185.00.
• Hogs: October lean hogs surged $1.25 to $100.85, a lifetime-high close for the contract. The next CME lean hog index is expected fall 16 cents to $122.09, but it still near a 14-month high.
   

Ag markets today: Two-sided trade was seen in a relatively quiet overnight session, but corn, soybeans and wheat were firmer and near their session highs this morning. As of 7:30 a.m. ET, corn futures were trading 2 to 4 cents higher, soybeans were 9 to 11 cents higher, winter wheat futures were 5 to 6 cents higher and spring wheat was 2 to 4 cents higher. Front-month crude oil futures were around 75 cents higher and the U.S. dollar index is more than 200 points lower this morning.

Technical viewpoints from Jim Wyckoff:

On tap today:

     • U.S. jobless claims are expected to rise to 264,000 in the week ended Aug. 6. (8:30 a.m. ET) UPDATE: Initial jobless claims, a proxy for layoffs, increased to a seasonally adjusted 262,000 last week from a revised 248,000 the previous week, the Labor Department said Thursday. The weekly number has been on an upward trend since reaching a 50-year low in March. Last week’s total was slightly above the prior 2022 peak set in July of 261,000 and was above the 2019 weekly average of 218,000. The four-week moving average for initial claims, which smooths out weekly volatility, rose by 4,500 to 252,000.    
      • U.S. producer price index for July is expected to increase 0.2% from the prior month. (8:30 a.m. ET) UPDATE: Wholesale prices fell in July for the first time in two years as a plunge in energy prices slowed the pace of inflation, the Bureau of Labor Statistics reported. The PPI, which gauges the prices received for final demand products, fell 0.5% from June, the first month-over-month decrease since April 2020, the month after Covid-19 was declared a pandemic. On an annual basis, the index rose 9.8%, the lowest rate since October 2021. That compares to an 11.2% increase in June and the record 11.6% gain in March. Most of the decline came from energy, which declined 9% at the wholesale level.
     • USDA Weekly Export Sales report, 8:30 a.m. ET

Fed officials comment on softening inflation data. Despite Wednesday’s news on consumer prices, two Federal Reserve officials responded to softening inflation data by saying it doesn’t change the central bank’s path toward even higher interest rates this year and next.

     Minneapolis Fed President Neel Kashkari, who prior to the pandemic was the central bank’s most dovish policy maker, said Wednesday that he wants the Fed’s benchmark interest rate at 3.9% by the end of this year and at 4.4% by the end of 2023. “I haven’t seen anything that changes that,” Kashkari said, responding to a question about a Labor Department report published Wednesday that showed consumer prices rose 8.5% from a year earlier in July. The print was slightly less than the 9.1% increase in the prior month that marked the highest inflation rate in four decades.

    Chicago Fed President Charles Evans said inflation remains “unacceptably high.” He said he expects “that we will be increasing rates the rest of this year and into next year to make sure inflation gets back to our 2% objective.”

     Background: Kashkari will be a voter on the central bank’s rate-setting Federal Open Market Committee next year, while Evans is set to retire early next year.

San Francisco Fed President Mary Daly told the Financial Times it was too soon to declare victory on inflation and would not rule out another 75-basis-point increase at the September Fed meeting. But she also said a 50-basis-point increase was her “baseline” for the September meeting. She said core inflation, stripping out food and energy, remains unacceptably high and shows little sign of moderating. “This is why we don’t want to declare victory on inflation coming down,” she told the paper. “We’re not near done yet.”

Sen. Elizabeth Warren rebuked Federal Reserve Chair Jerome Powell for withholding information on trading by central bank officials during the pandemic and said an investigation into the matter by the Fed’s inspector general was “troubling.” The IG report “raises new concerns about the reasons why you continue to withhold key information about Fed officials’ financial trading activity from Congress and the public,” Warren (D-Mass.) said in a letter to Powell released Thursday.

Workers regained some ground in July as inflation-adjusted hourly earnings rose half a percentage point, the first increase since last September. But real average hourly earnings are still down 3% in the past year. Add a decline in the average workweek since a year ago, and the result is a 3.6% drop in real weekly pay for the average American.

A new survey shows wages for truck drivers rose at a double-digit pace last year, the Wall Street Journal reports (link), as companies raced to recruit workers in a market marked by tight labor conditions and high freight demand. The American Trucking Associations said in its annual salary survey that average wages for drivers of big rigs across the sector reached about $69,700 last year, up 11% from the previous year. The sharp increase came before high inflation began coursing through the economy this year and is one sign of the changes in the business landscape as supply-chain and transportation issues have grown more prominent. Big trucking companies reporting earnings say their labor costs are sharply higher again so far this year, even as some say recruiting is getting easier while freight demand is softening.

Social Security recipients are on track to receive the largest cost-of-living increase in more than four decades next year. If inflation remains at the current level, on average, over the next two months, the approximately 70 million retirees and disabled people who receive Social Security benefits could see their monthly checks rise by about 9.6% in 2023, according to estimates from the nonprofit Senior Citizens League, which advocates for protecting and strengthening Social Security and Medicare benefits. Link for details.

Market perspectives:

     • Outside markets: The U.S. dollar index is weaker in early U.S. trading. The yield on the 10-year U.S. Treasury note is fetching 2.777%.

     • Gasoline prices declined 7.7% from June after peaking at an average of more than $5 a gallon nationwide. Consumer shock at the gas pump may have contributed to the pullback. Gasoline inventories rose as drivers each day bought less than during the same period in 2021, according to the Energy Information Administration. And 2021 was a Covid year.

     • The national average cost of a gallon of regular gasoline now stands at $3.99, according to AAA (link). That’s higher than it was a year ago but still well below a peak of nearly $5.02 in mid-June. The national average includes a wide range of prices, from nearly $5 a gallon in Oregon and Nevada to about $3.50 in Texas and Oklahoma. Prices could rise again for several reasons: The course of the Russia/Ukraine war could further hamper global oil supplies, energy investors’ views on the economy could change and hurricanes later this year could damage Gulf Coast refineries and pipelines, choking off supplies.

     • European natural gas jumped Wednesday. Prices are close to record highs again as countries fill up inventories ahead of the winter while Russia continues to squeeze supplies. Now a drop in the Rhine River to crisis levels is threatening the transport of commodities.

     • The International Energy Agency revised up its outlook for global oil supply, partly because Russia has continued to pump more oil than expected. “While Russia’s exports of crude and oil products to Europe, the U.S., Japan and Korea have fallen by nearly 2.2 [million barrels per day] since the start of the war, the rerouting of flows to India, China, Turkey and others, along with seasonally higher Russian domestic demand has mitigated upstream losses,” the Paris-based agency said. By July, Russian oil production was only 310,000 barrels per day below pre-war levels while total oil exports were down just 580,000 barrels per day, it added. The release of 180 million barrels of oil from the U.S. Strategic Petroleum Reserve has also helped bump up supply.

     • OPEC cuts oil-demand forecasts as economic growth slows. Global oil supplies are slowly catching up with flagging demand for crude, leaving the oil market close to balanced, the Organization of the Petroleum Exporting Countries (OPEC) said, suggesting the cartel sees little need in the short term to increase its output further. The Vienna-based producers’ group cut its forecasts for global oil demand this year by 260,000 barrels to 100.03 million barrels a day, citing the impact of slowing global economies. It also cut its demand forecasts for 2023 by the same amount to 102.72 million barrels a day.

     • Two former JPMorgan traders were found guilty of manipulating gold prices. They were accused of spoofing, a practice outlawed in 2010, in which traders quickly send buy and sell orders without wanting to follow through with them, to create a false sense of demand. Link for details.

     • Lumber futures on Wednesday ran into their daily price-increase limit for the first time since April, reversing a slide that had knocked wood prices down to prepandemic levels. Futures gained $49, or 8.9%, to hit $601.80 per thousand board feet.

     • The SEC proposed requiring large hedge funds to report cryptocurrency exposure, as the agency and the Commodity Futures Trading Commission weigh a broader set of updates expanding the scope of a confidential filing known as Form PF. The two regulators settled on the changes after consulting with the Treasury Department and Fed on potential financial-stability risks in the private-funds industry, whose total assets are nearing the size of the banking sector’s.

     • NWS weather: Heavy rain and flash flooding threat continues along the Gulf Coast and across portions of the Mississippi Valley, Great Lakes and Ohio Valley... ...Monsoonal storms and the potential for flooding to continue for portions of the Southwest into the Great Basin and Rockies... ...Above-normal temperatures are expected from the northern Intermountain West into the northern and central Plains, while much of the East begins to cool down through late in the week.

Items in Pro Farmer's First Thing Today include:

     • Firmer price tone this morning
     • First Ukrainian wheat shipments expected next week (details in Russia/Ukraine section)
     • Firm slashes EU corn production forecast
     • Exchange expects fewer Argentine corn acres, more soybeans
     • Trickle of cash cattle trade
     • Cash hog index turns choppy

— Summary: Satellite photos taken after a series of explosions on Tuesday at a Russian air base in Crimea appear to show at least three blast craters and at least eight wrecked warplanes, indicating a serious blow to the Russian military contradicting the Kremlin’s account. Russian authorities had previously denied that any aircraft had been destroyed.

• Ukraine won approval for a debt-payment freeze from the holders of its international bonds, gaining relief for a budget wrecked by Russia’s invasion. Investors representing around 75% of $19.6 billion worth of Ukraine’s foreign bonds agreed to defer coupon and principal payments until 2024, the Finance Ministry in Kyiv said on Wednesday.
• Russia resumed oil flows through a pipeline to central Europe after Hungary’s sole refiner stepped in to resolve a tussle over the payment of a transit fee, easing fears of a supply crunch in the region. The transit fee payment agreement covers only flows to Slovakia and Hungary, not the Czech Republic, according to Slovnaft, part of Mol Group.
• Weather has delayed the departure of a ship carrying Ukrainian grain from the port of Chornomorsk, according to the Turkish Defense Ministry. There was no indication given on when its departure would take place.
• First Ukrainian wheat shipments expected next week. The first shipments of wheat should start flowing from Ukrainian ports next week under the new export deal, a top U.N. official said on Wednesday. The first 12 shipments that have left three Black Sea ports designated by the deal were carrying corn or oilseed products. Frederick Kenney, interim U.N. Coordinator at the Joint Coordination Center (JCC) in Istanbul, said: “The silos were full of corn and the ships that were there have been loaded with corn. We’re actually transitioning to wheat.” Ships are inspected coming into and out of the Bosphorus by JCC representatives. “We’re seeing steady progress in the number of ships coming in and out,” he said. “We’re off to a good start.” The Turkish defense ministry said two grain ships had been inspected in Istanbul on Wednesday and were on their way to Ukraine but gave no further details.

— Treasury Secretary Janet Yellen directed the Internal Revenue Service (IRS) not to use any of the new funding allocated in the Democrats' new health care and climate bill to increase the number of audits of Americans making less than $400,000 a year, according to a copy of the letter obtained by CNN. The letter to IRS Commissioner Charles Rettig comes amid attacks from Republicans that the around $80 billion the Inflation Reduction Act would give to the IRS over the next 10 years would result in more middle-class Americans and small businesses getting audited. The Biden administration has repeatedly said the IRS would focus on increased enforcement activity on high-wealth taxpayers and large corporations.

     The package proposes an around $80 billion boost to IRS funding to be phased in over 10 years, with $45.6 billion allocated towards beefing up enforcement. The investment is expected to bring in $203.7 billion over about a decade, according to a report by the nonpartisan Congressional Budget Office. Republicans have raised concerns that beefing up the agency could lead to audits that negatively target lower- and middle-income earners, which the Biden administration has repeatedly denied.

• Currently, the IRS has just over 78,000 total full-time employees doing all of the business of the Agency. According to John Koskinen, who served as IRS commissioner from 2013 to 2017, that’s down from around 100,000 when he first started.
• A Treasury Department report (link) from May 2021 estimated that such an investment would enable the agency to hire roughly 87,000 employees by 2031. But most of those hires would not be Internal Revenue agents and wouldn’t be new positions.
• According to a Treasury Department official, the funds would cover a wide range of positions including IT technicians and taxpayer services support staff, as well as experienced auditors who would be largely tasked with cracking down on corporate and high-income tax evaders. “It is wholly inaccurate to describe any of these resources as being about increasing audit scrutiny of the middle class or small businesses,” Natasha Sarin, a counselor for tax policy and implementation at the Treasury Department, told Time magazine.
• The IRS will have to recruit and train thousands of employees who have the necessary skills to audit high-income taxpayers and corporations, as well as those who are able to upgrade the agency’s technology.
   
• More than half of the agency’s current employees are eligible for retirement and are expected to leave the agency within the next five years. “There’s a big wave of attrition that’s coming and a lot of these resources are just about filling those positions,” says Sarin, an economist who has studied tax avoidance extensively and who was tapped by the Biden administration to beef up the IRS’s auditing power.
• In all, the IRS might net roughly 20,000 to 30,000 more employees from the new funding, enough to restore the tax-collecting agency’s staff to where it was roughly a decade ago, according to a Time account.

     Senate GOP members could still stymie some of the IRS funding. Congress revisits the appropriations for the IRS at least once a year through the Financial Services and General Government appropriations bill. This appropriation bill is often passed as part of a Continuing Resolution (CR) or by an Omnibus bill each of which lumps multiple spending bills together. To pass a CR or Omnibus bill doesn’t require 51 votes, but instead needs the 60 votes to overcome a filibuster in the Senate, meaning that 41 GOP Senators can simply just say no to the dramatic expansion of the IRS by refusing to fund it.

— CRS issues analysis of ag provisions in reconciliation bill. The Congressional Research Service (CRS) issued a summary of agriculture provisions in the Inflation Reduction Act. Link to report.

— China envoy vows no retreat: We’ll take Taiwan. Xiao Qian, Chinese ambassador to Australia, threatened a re-education process for Taiwanese people, with Beijing “ready to use all necessary measures” to restore liberal democracy “to the motherland.”

— U.S. will operate around Taiwan, despite China’s pressure. In response to Chinese military drills around Taiwan, the U.S. said it would continue operating in the Taiwan Strait. Within a few weeks, officials said, the U.S. Navy is planning to run ships through the Taiwan Strait, ignoring China’s recent claim that it controls the entire waterway. Officials said they would not send the Ronald Reagan, the Japan-based aircraft carrier, because it would be too provocative.

     Of note: Maritime insurers aren’t labeling the Taiwan Strait as facing elevated risk despite China’s recently concluded military actions in the waters.

— Speaker Nancy Pelosi (D-Calif.) delivered a defense of her Taiwan trip and seemed to contradict President Joe Biden’s earlier claim that the military “thinks it’s not a good idea” for her to visit the self-governing island. “I don’t remember them ever telling us not to go,” Pelosi said during a press conference with the other CODEL members. “Their preparation actually, I think, minimized the impact of the Chinese on our trip.” Pelosi went on to accuse Beijing of using her trip as a “pretext” to create a “new normal” through its provocative military drills, adding: “We just can’t let that happen.” The speaker also laughed off China’s new sanctions targeting her and her family.

— Chinese student visas to the U.S. in the first half of 2022 were down more than 50% from prepandemic levels, hitting revenue at colleges and universities around the country. China has been the top source of international students to the U.S. for more than a decade, but even before Covid, Chinese students were shifting their sights elsewhere, driven by the emergence of more domestic and international alternatives and doubts about their U.S. welcome. Pandemic travel restrictions and heightened safety concerns accelerated the decline.

— Will the Biden administration ever decide on changing some tariffs on China products? The president is “very cautious” about making a move on the Trump-era tariffs on China and is still assessing his options, Commerce Secretary Gina Raimondo said Wednesday. House Speaker Nancy Pelosi’s (D-Calif.) visit to Taiwan has made geopolitics with China “particularly complicated” as President Joe Biden weighs the future of tariffs on more than $300 billion in goods from the U.S. rival, according to Raimondo. “Certainly, it has made it a little more challenging,” Gina Raimondo said in an interview on Bloomberg Television’s “Balance of Power with David Westin” on Wednesday. “It’s harder, but I am hopeful that we will get beyond that and get back to a place where we can have more of those discussions… “But I know he’s looking at it. We’ve talked about it again recently, and I expect he’ll be making a decision before too long.”

     Meanwhile, labor unions will continue to have “substantive input” into the Biden administration's trade policies, U.S. Trade Representative Katherine Tai told the United Steelworkers’ annual convention in Las Vegas. She said the administration is going to take new initiatives against China's unfair trade and economic practices. That said, there was no specific mention about whether Washington will eliminate tariffs on some Chinese imports. But sources have told Reuters that U.S. officials are now recalibrating their thinking on whether to some scrap tariffs or launch a new “Section 301” investigation, setting aside those options for now in the wake of China's unprecedented war games around Taiwan in response to Pelosi's visit to the island. The United Steelworkers and other unions have urged USTR to keep the tariffs on Chinese goods in place to help “level the playing field” for American workers and reduce U.S. reliance on Chinese suppliers. Tai has argued in favor of keeping the tariffs as leverage as part of a strategy to press China for changes to its state driven economic policies.

     Tai said President Joe Biden's “worker-centered” trade and economic policies were producing results, with manufacturing jobs and industrial production rising. Trade policy will no longer neglect the needs of workers and domestic investments such as last year's infrastructure act and the $440 billion climate, drugs and tax bill will create more job opportunities ― and demand for steel, Tai said. “Worker-centered trade starts with workers at the table. But it's got to be more than that. You also need to be able to provide substantive input. And, most importantly, to see your impact on policy,” Tai said.

     Unions also will be a centerpiece of trade discussions with the European Union, Tai said, adding that USTR would also continue to press labor rights cases under the U.S.-Mexico-Canada Agreement on trade.

— Costa Rica requested to join a trans-Pacific trade bloc. The country seeks membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

— EIA responds to furor over puzzling gas-demand data. The U.S. Energy Information Administration (EIA) responded to confusion about gas-demand data released last week that showed seasonal consumption falling below pandemic levels. In a post (link), the agency explained that its weekly data on gas supplies does “not estimate the ultimate consumption of petroleum products by consumers.” Instead, it’s a measure of the movement of products before they reach retail service stations.

— Ford CEO's EV battery warning. Electric vehicle makers, such as Ford Motor and Tesla, have raised prices recently, pushed in large part by rising costs for the materials to make batteries. Don’t expect that to change in the foreseeable future, FordCEO Jim Farley said Wednesday. “I don’t think there’s going to be much relief on lithium, cobalt and nickel anytime soon,” he told reporters.

— California energy panel oks larger offshore wind targets. The California Energy Commission voted unanimously Wednesday to sizably boost the state’s offshore wind development goals. Commissioners adopted a plan to build 2 to 5 gigawatts by 2030 and at least 25 gigawatts of offshore wind energy by 2045, up from earlier goals of 3 gigawatts by 2030 and 10 to 15 gigawatts by 2045.

— U.S. food prices rose 1.1% in July and are up 10.9% over last year. Groceries that families take home rose even faster at 1.3% for the month, or 13.1% over the past 12 months. Some are already saying food prices will ebb in coming weeks following the recent decline in commodity prices, but history shows it may take a while since inflation expectations are now built into the supply chain.

     Meanwhile, Democrats are blaming major food producers for passing along inflation to consumers while recording profits — a strategy they hope can blunt the political impact of rising prices ahead of the midterm elections. Their strategy was underlined in an analysis from left-leaning watchdog Accountable.US on Wednesday, which pointed to positive financial results for food companies including Sysco, Kellogg, Starbucks, Kraft Heinz, and Chipotle Mexican Grill in recent months. Those results came even as consumers faced food prices that climbed 10.9% compared to a year ago, the most since 1979, according to inflation figures released Wednesday.

     Of note: Check this link for a handy Wall Street Journal interactive tool to see the year-over-year changes for specific food items.

— Summary:

• Global Covid-19 cases at 587,555,310 with 6,427,595 deaths.
• U.S. case count is at 92,562,177 with 1,034,549 deaths.
• Johns Hopkins University Coronavirus Resource Center says there have been 604,238,972 doses administered, 223,035,566 have been fully vaccinated, or 67.69% of the U.S. population.

— Another new virus identified, and it’s not Covid-related. Researchers in China have identified a novel virus unrelated to Covid-19 that has infected 35 people. The LayV virus, believed to have spread to humans from animals, is a newly identified member of the henipaviruses that can infect humans and have high fatality rates.

— $9.7 billion is the approximate projected amount of political ad spending in the two-year election cycle ahead of November’s midterms, according to AdImpact. That would be more than an estimated $4 billion in the 2018 cycle and about $9 billion in the 2020 cycle.

— Abortion and Nov. 8 elections. Tuesday’s primary elections gave a few more signals that Democrats have been motivated to vote following the Supreme Court ruling on abortion. California, Kentucky, Montana and Vermont have abortion referendums scheduled for November. Republican candidates who would otherwise likely win might instead face a big Democratic turnout. The Wall Street Journal notes: “The lesson of recent primaries is that this election is far from won, even in the House.”

— Gmail users could soon see more political ads in their main inboxes as federal regulators are set to consider a request to suspend spam filtering. The move expected today by the Federal Election Commission comes despite opposition from thousands of public comments, ranging from the Democratic National Committee to ordinary computer users, asking that political spam filters be left on.

— The White House and Democrats are feeling a lot better about recent developments and their chances in Nov. 8 elections. The Dems’ favorite media slot, MSNBC, put together this graphic:

— House Oversight Republicans are demanding a briefing on the National Archives' role in the FBI search of Donald Trump's estate. In a letter (link) obtained by Politico, the panel's Republicans are demanding documents and communications between the two agencies relating to the Trump search, with the documents being sent to the committee no later than Aug. 24.

— The funeral for the late Rep. Jackie Walorski (R-Ind.) will be held today in Granger, Ind. Following her death in a car accident on Aug. 3. Also killed in the tragedy were two staffers, Emma Thomson and Zachery Potts. House Minority Leader Kevin McCarthy (R-Calif.), who counted Walorski as both a friend and ally, is expected to speak at the services. Walorski, 58, was born and raised in South Bend. After college, Walorski worked as a TV reporter in her hometown. She later spent several years as a Christian missionary in Romania. Thomson’s funeral was held on Wednesday in Johnstown, Pa. Potts’ funeral will take place this Saturday in Three Oaks, Michigan.

     Indiana Gov. Eric Holcomb has called for a special election to fill the seat of Walorski to be held on Nov. 8. There will also be the election that same day for the full House term beginning in Jan. 2023. Republicans will hold a pair of caucuses Aug. 20 to choose their nominee to serve out the remainder of this term — November until the first day of the next Congress — and next term. Reports note some eyeing a run are former Indiana Attorney General Curtis Hill and former Rep. Marlin Stutzman’s (R-Ind.) wife Christy.

— House schedule. After tomorrow’s vote on the Inflation Reduction Act, the House isn’t due to vote again until Sept. 13. The chamber is only scheduled to be in session for 11 days that entire month. The final vote is set for Sept. 30, giving members a full five weeks back home before Election Day.

— Trump takes the Fifth Amendment. In a New York-based civil probe of his business dealings — apparently unrelated to anything that took place in Florida — the ex-president invoked his right against self-incrimination. The AG’s office has said that it has collected significant evidence indicating that the Trump Organization used fraudulent or misleading asset valuations to obtain loans, insurance coverage and tax deductions. Trump and the company have denied wrongdoing. In a lengthy statement, Trump denied wrongdoing, accused the U.S. government of unfairly targeting him and said he would refuse to answer questions, citing his Fifth Amendment right not to incriminate himself.

— The Justice Department has to respond to motions to unseal a warrant that triggered the FBI raid on former President Donald Trump’s Mar-a-Lago home, according to a magistrate judge who reportedly approved the search. Judicial Watch and the Albany Times Union newspaper filed a motion to unseal the document earlier this week, which was granted by a judge in the case. “On or before 5:00 p.m. Eastern time on August 15, 2022, the Government shall file a Response to the Motion to Unseal,” wrote Judge Bruce Reinhart on Wednesday afternoon, referring to the Department of Justice. Neither the FBI nor Justice Department has issued public comments about the raid.

— The U.S. Justice Department charged a member of Iran’s Islamic Revolutionary Guards Corps with plotting to kill John Bolton, Donald Trump’s national security adviser. Former Secretary of State Mike Pompeo was the second intended target of Iranian operative Shahram Poursafi.

— Musk’s bid for $886 million rural broadband subsidy rejected by FCC. Elon Musk’s request for $886 million in U.S. subsidies for beaming broadband service to rural areas via his SpaceX satellites was rejected by the Federal Communications Commission (FCC). Funding Musk’s network of Starlink satellites wouldn’t be the best use of limited broadband subsidies, the FCC said.