Inflation & Logistical Snafus Could Linger as Omicron Impacting Chinese Ports
Kerfuffle among Dems on House Ag panel | Biofuel lobbyists could lose another RFS battle
In Today’s Digital Newspaper
• U.S. jobless claims rise to 230,000
• U.S. PPI rose at annual rate of 9.7% in December
• Omicron variant threatening operations at America’s busiest container-port complex
• Biden cites inflation ‘progress’
• Fed’s Bullard: U.S. central bank will need to move more aggressively on rate rises
• Former Treasury Sec. Summers sees winter full of inflation
• Budget deficit narrows
• Dollar extends slide
• Bitcoin traded around $44,000
• Copper traded above $10,000 a ton Wednesday for first time since October
• Valero, Marathon top buyers in oil reserves sale
• Ag demand update
• Soybeans lead overnight price drop
• Exchange slashes Argentine crop estimates amid heat, drought
• Ukraine raises grain export forecast
• Firm cuts EU wheat export forecast
• India to import less palm oil, more soyoil
• Packer beef margins climb
• Pork margins are declining
• Appropriators to meet for talks: Shelby
• Report indicates some Dems want new leader atop Ag Committee with farm bill ahead
• Senate panel clears EPA research chief, Fish and Wildlife pick
• Biden rail chief confirmed
• EPA taps lead for infrastructure implementation
• Soybeans, sorghum and cotton main U.S. export sales activity for China
• China looks to secure supplies as strains with U.S. and its allies grow
• House leaders crafting China bill compromise
• Shipping firms making switch to avoid delays at nearby Ningbo
• China finds Omicron in another port city, further threatening supply chains
• Pork prices could fuel China consumer inflation later this year
• China aims to boost soybean production 40% by 2025
• Lawmakers say USMCA needs enforcement
Energy & Climate Change:
• Report raises prospect of reduction in final conventional ethanol level for 2022 in RFS
• Rural challenges for EVs
Livestock, Food & Beverage Industry Update:
• Supply chain snags, labor shortages & inflation stressing food production, distribution
• Thousands of workers at supermarket operator Kroger went on strike in Denver
• Update on possible Supreme Court decision on Prop 12 petition
• Truck drivers must comply with OSHA’s shot-or-test emergency temporary standard, but…
Politics & Elections:
• GOP Rep. Hollingsworth won’t seek re-election
• If inflation persists, Biden could pay a political price in November’s midterm elections
• McCarthy will not cooperate with Jan. 6 probe
• What it would take for GOP to build its biggest majority since Great Depression
• Democrats’ complex strategy on voting rights legislation
Other Items of Note:
• Biden administration imposed sanctions on North Korea
• NATO’s secretary-general warns of ‘real risk for new armed conflict in Europe’
• Europe’s growing dependence on Russian gas and oil is limiting room to maneuver
• Des Moines Register is ending home delivery on Saturdays, starting in March
• Remembering… Ronnie Spector, leader of girl group The Ronettes, who died at age 78
Equities today: Global stock markets were mostly higher overnight. U.S. Dow opened up 150 points higher. Asian equities were mixed as traders reviewed US inflation data. Hong Kong’s Hang Seng Index rose 27.60 points, 0.11%, at 24,429.77. Japan’s Nikkei shed 276.53 points, 0.96%, at 28,489.13. European equities are narrowly mixed in early trading action. The Stoxx 600 was nearly flat while regional markets were seeing gains of 0.6% to losses of 0.3%.
U.S. equities yesterday: The Dow rose 38.30 points, 0.11%, at 36,290.32. The Nasdaq gained 34.94 points, 0.23%, at 15,188.39. The S&P 500 was up 13.28 points, 0.28%, at 4,726.35.
2% yield for 10-year U.S. Treasuries? Mark Haefele, chief investment officer at UBS Global Wealth Management, told clients that the bank expects the yield on benchmark 10-year US Treasuries to climb to 2% "over the coming months, as investors digest the Fed's more hawkish stance along with further elevated inflation readings." The yield on 10-year notes was at nearly 1.75% early Thursday, up from closer to 1.5% at the start of the year.
On tap today:
• U.S. jobless claims are expected to fall to 200,000 in the week ended Jan. 8 from 207,000 one week earlier. (8:30 a.m. ET) UPDATE: Filings for jobless claims rose to a seasonally adjusted 230,000 last week, an increase of 23,000, as a tight U.S. labor market has kept applications near pre-pandemic lows for the past two months. The increase in the Jan. 8 week came as employers dealt with workers calling in sick because of the Omicron variant of Covid-19. The four-week moving average for last week edged higher, the Labor Department said, to 210,750.
• U.S. producer price index for December is expected to increase 0.4% from the prior month. (8:30 a.m. ET) UPDATE: The U.S. PPI rose at an annual rate of 9.7% in December. Details: Inflation at the wholesale level rose 0.2% in December from November with the November result revised up to a 1.0% gain that was initially reported as 0.8%, according to the PPI-FD data. On a yearly basis, the increase was 9.7%, down slightly from the November rate as that was revised up to an increase of 9.8% versus the initially reported 9.6% rise. Minus food and energy, wholesale prices, or the core rate, rose 0.5% from November while they were up 8.3% on an annualized basis, well above the 7.7% mark from November.
• USDA Weekly Export Sales report, 8:30 a.m. ET
• Federal Reserve governor Lael Brainard appears before the Senate Banking Committee as lawmakers weigh her nomination to become vice chair of the central bank. (10 a.m. ET) From her prepared remarks: “Inflation is too high, and working people around the country are concerned about how far their paychecks will go. In some foreign countries, I saw up close how high inflation hurts workers and families, especially the most vulnerable. Our monetary policy is focused on getting inflation back down to 2% while sustaining a recovery that includes everyone." While Brainard is aligned with Powell and other FOMC officials on issues linked to monetary policy, she has opposed them on other occasions, like supervisory matters and big bank oversight. She has even dissented more than 20 times on board votes connected to easing regulations on the largest U.S. financial institutions. Brainard has also advocated for making the financial system more inclusive and found a path to address climate change through the Fed's financial stability mission.
• Federal Reserve: Richmond Fed President Thomas Barkin, Philadelphia Fed President Patrick Harker, Chicago Fed President Charles Evans speak.
• President Biden plans to update the country on his administration’s Covid efforts, a speech that comes as his administration faces escalating criticism from health experts and even some former advisors.
• President Biden will also journey to Capitol Hill to speak with his Dems re: voting rights legislation.
Omicron variant is threatening operations at America’s busiest container-port complex. Infection rates are rising rapidly among dockworkers at the neighboring ports of Los Angeles and Long Beach, the Wall Street Journal reports (link), just as marine terminals are trying to ramp back up after worker absences during the holidays. About 800 dockworkers were out sick for Covid-related reasons at the start of this week, according to the Pacific Maritime Association, which secures labor for terminals. That represents about 10% of the roughly 8,000–person daily workforce crucial to the movement of boxes in Southern California. Terminal operators say that with staffing levels that low they will struggle to chip away at the backlog of about 100 container ships waiting to unload at the ports, which has remained at near record levels since Christmas.
Biden cites inflation ‘progress’. President Biden said his administration is “making progress” in battling cost-of-living increases, pointing to slower gains last month in energy and food prices, even as headline consumer inflation reached its highest level in almost four decades. The Department of Labor report on the consumer price index “shows a meaningful reduction in headline inflation over last month, with gas prices and food prices falling,” Biden said in a statement. “At the same time, this report underscores that we still have more work to do.” The consumer price index climbed 7% in 2021, the largest 12-month gain since June 1982, according to Labor Department data.
Where did White House go wrong on ‘transitory inflation’? Brian Deese, the director of the White House’s National Economic Council, said Wednesday that inflation has lingered in part because the unemployment rate fell more quickly than expected and the pandemic has continued to affect the global economy and the supply chain. Asked by a reporter what the administration got wrong in calling inflation “transitory,” Deese said, “If we look at the situation earlier in the year, a number of projections and forecasts have come differently than we anticipated… I think that the nomenclature aside, we find ourselves in a position now where we are looking forward and most forecasters are projecting that the price increases will moderate,” he added, aligning the administration with forecasts that inflation will ease over the course of this year.
Over the course of the year, food, energy and shelter costs all rose on average by more than 8%. Those three categories constitute 50 percent of the average household budget, said Douglas Holtz-Eakin, a GOP policy analyst who has served as director of the nonpartisan Congressional Budget Office. “That’s their substantive problem,” Holtz-Eakin said of the Biden administration. “This is unheard of for 40 years.”
Summers sees a winter full of inflation. “The danger is we’re starting to see a dynamic of wage-price spiral in which rising wages lead to rising prices, which lead to rising prices, which lead to rising wages,” said Larry Summers, who served in senior positions in the Clinton and Obama administrations but has been critical of Biden’s $1.9 trillion stimulus package. “The crucial macroeconomic insight from the experience of the 1960s and 1970s is that an overheated economy leads to not just high inflation but accelerating inflation,” Summers added. “We currently have an overheated economy, and there’s not much reason to think anytime soon it’s going to cool off.”
Bottom line: The Consumer Price Index rose by 7% in the year to December, the highest annual inflation rate since June 1982 — even though the monthly pace slowed, partly because of lower energy prices. Stripped of food and energy prices, inflation was 5.5%, the highest since February 1991.
St. Louis Fed President James Bullard said the U.S. central bank will need to move more aggressively on rate rises this year as it seeks to stem an inflation surge. Bullard has been at the leading edge of officials last year who started talking about pulling back from the extraordinary levels of support provided by the Fed over the course of the pandemic. Link for details.
Philadelphia chief Patrick Harker supports "at least three" and is very open to starting in March, he told the Financial Times. San Francisco's Mary Daly sees one "as early as March even," though she didn't say how many more.
Budget deficit narrows. The federal government ran a $21 billion deficit during December, the smallest monthly gap in two years, as the government took in more tax revenue while spending edged higher. The cumulative deficit in the first three months of the fiscal year stood at $378 billion compared with $573 billion at the same point the prior year. Federal receipts have risen at a faster rate than outlays during the first quarter of the fiscal year, partly reflecting an increase in workers’ taxable wages and salaries.
• Outside markets: The U.S. dollar index is weaker ahead of U.S. wholesale inflation data, with the euro and British pound both firmer against the U.S. currency. The yield on the 10-year U.S. Treasury note is weaker, trading around 1.74% ahead of U.S. wholesale inflation figures. Gold futures are lower while silver futures have gained ahead of U.S. trading. Gold is around $1,824 per troy ounce and silver around $23.25 per troy ounce.
• Dollar extended its slide as a growing tide of investors bet the world’s reserve currency has reached a peak with expectations of Fed rate liftoff largely priced-in to the market. The greenback also underperformed all its Group of 10 peers. By market day’s end on Wednesday, the Bloomberg broad dollar index had suffered its worst daily decline since last May. Only one day in 2021 saw the dollar fall as much as Wednesday.
• Bitcoin traded around $44,000 as the inflation numbers rekindled the debate about whether the cryptocurrency is a hedge against rising consumer prices.
• Copper traded above $10,000 a ton Wednesday for the first time since October. Joining the rally were nickel and lithium stocks as demand for electric vehicles hits fresh records. The price of nickel notched a 10-year high, climbing to $23,000 a ton as stockpiles continue to dwindle across the globe. Nickel is one of the most widely used minerals for EV batteries, though supply does not seem to be keeping up with demand.
• Crude oil futures are under pressure ahead of U.S. trading, with U.S. crude around $82.20 per barrel and Brent around $84.45 per barrel. Crude was weaker in Asian action, with U.S. crude down 16 cents at $82.48 per barrel and Brent down 17 cents at $84.50 per barrel.
• Valero, Marathon top buyers in oil reserves sale. Valero Energy and Marathon Petroleum were the biggest buyers in the Biden administration’s first sale of crude from U.S. emergency stockpiles in a bid to bring down gasoline pump prices. Six companies bought 18.1 million barrels of high-sulfur crude from the Strategic Petroleum Reserve caverns in a sale tender that closed Jan. 4, the Energy Department said yesterday. The U.S. had earlier offered 32 million barrels in a crude loan program. Oil prices started falling in late October after Biden signaled he was working to arrange an internationally coordinated release of crude from the reserves of several major consumers. The Omicron virus variant then pushed prices down further, although oil has since recovered to levels near where it was before the reserve sales were flagged.
• Ag demand: Japan purchased 107,555 MT of wheat from its weekly tender, including 56,095 MT from the U.S. and 51,460 MT from Canada. South Korea tendered to buy up to 140,000 MT of optional origin corn.
• NWS weather: Quick hitting winter storm to produce a swath of heavy snow across parts of the Northern Plains and Midwest... ...Temperatures plunge behind an arctic cold front pushing through the Northeast by the end of the week and could lead to dangerous wind chills into Saturday morning.
Items in Pro Farmer's First Thing Today include:
• Soybeans lead overnight price drop
• Exchange slashes Argentine crop estimates amid heat, drought
• Ukraine raises grain export forecast
• Firm cuts EU wheat export forecast
• India to import less palm oil, more soyoil
• Packer beef margins climb
• Pork margins are declining
— Appropriators to meet for talks: Shelby. The chief House and Senate negotiators on a fiscal 2022 spending measure will meet within the next day to discuss dividing about $1.3 trillion in annual spending between defense and non-defense programs, the Senate’s senior Republican appropriator said. “We’re beginning to talk pretty seriously,” Sen. Richard Shelby (R-Ala.) said in an interview. “We’re trying to maybe get together today or tomorrow.” He said lawmakers don’t yet have top-line spending totals for annual defense and non-defense spending. More than one-quarter of the way through the 2022 fiscal year, the two sides still haven’t agreed on a topline number for the annual spending bills. And then they must work their way through policy riders as they hash out individual measures. Federal agencies are funded through Feb. 18 under a continuing resolution.
— Report indicates some Democrats want new leader atop Agriculture Committee with farm bill ahead. Politico is reporting that a growing number of House Democrats are quietly wanting to replace House Agriculture Committee Chairman David Scott (D-Ga.) as the panel gets set to start the process of drafting a new farm bill. The article notes some have raised questions about his health but perhaps more importantly about his mental capacity to handle the massive piece of legislation. Some speculated that he will not be replaced, but those in charge of the various subcommittees would play a larger role.
Politico also indicated that some lawmakers have expressed their concerns to House leadership. But that was tamped down via a statement from the office of House Speaker Nancy Pelosi (D-Calif.). “The Speaker has confidence in Chairman Scott’s leadership,” Drew Hammill, Pelosi’s deputy chief of staff, said in a statement. “No such concerns have been raised by Members with our office.”
Scott also pushed back on the talk, telling Politico via a phone interview that those suggesting replacing him as chair just wanted to be chairs of the panel. “These are people that want this position,” Scott said.
This could add another dynamic into the coming farm bill debate, one that is not expected to be finished prior to the November elections and may take a lot longer to complete with the prospect that Republicans could retake control of at least the House in the November balloting. This is why a growing number of observers predict a one- or two-year extension of the current farm bill.
— Senate panel clears EPA research chief, Fish and Wildlife pick. The Senate Environment and Public Works Committee approved one of Biden’s EPA nominees overseeing research, as well as the administration’s pick to lead the Interior Department’s Fish and Wildlife Service. The nominations of Christopher Frey and Martha Williams will now proceed to the Senate floor. Frey was approved on an 11-9 vote, and Williams cleared the panel by a 16-4 margin.
— Biden rail chief confirmed. Amitabha Bose won confirmation by a Senate vote of 68-29 yesterday, more than eight months after President Joe Biden nominated him to be administrator of the Federal Railroad Administration.
— EPA taps lead for infrastructure implementation. Zealan Hoover, senior advisor to EPA Administrator Michael Regan, is leading the agency’s implementation of the bipartisan infrastructure law, according to Deputy Press Secretary Tim Carroll. EPA released a fact sheet (link) that lays out the priorities on which Hoover will focus on, including pollution prevention; the more than $50 billion appropriated to rehab drinking water, wastewater, and stormwater infrastructure; $5.4 billion to clean up legacy pollution at superfund and brownfields sites; and investments in electric and low-emission school buses.
— Soybeans, sorghum and cotton main U.S. export sales activity for China. USDA’s update of export sales activity for the week ended Jan. 6 continued to show soybeans, sorghum and upland cotton as the main commodity sales to China.
Activity for 2021-22 included net sales of 70,150 tonnes of corn, 143,870 tonnes of sorghum, 301,795 tonnes of soybeans and 139,485 running bales of upland cotton.
Sales activity for 2022-23 of 63,000 tonnes of soybeans and 968 running bales of upland cotton were also reported.
For meat, the report covered the end of 2021, putting accumulated beef exports at 153,844 tonnes, with 39,621 tonnes outstanding. There were sales of 1,101 tonnes reported for 2022. For pork, accumulated exports in 2021 totaled 400,051 tonnes. Sales of pork for 2022 1,403 tonnes were reported.
— China looks to secure supplies as strains with U.S. and its allies grow. Beijing is trying to fortify the Chinese economy against a prolonged period of tension with the U.S. and other countries, stockpiling some essentials and planning on more domestic production as it accelerates efforts to make China less dependent on the world, the Wall Street Journal reports (link). China’s economic agencies, including the top planning authority, the National Development and Reform Commission, and the ministry overseeing agriculture, recently have singled out “security” as a priority for 2022, according to official releases. In particular, authorities are pledging to secure the supplies of everything from grains to energy and raw materials, as well as the processes involved in production and distribution of industrial parts and commodities. Having ramped up grain purchases in recent months, China has also detailed plans to set aside arable land to grow soybeans, a crop it had all but abandoned after its 2001 entry into the World Trade Organization.
— House leaders crafting China bill compromise. The House is preparing to move forward on a China competitiveness bill that would authorize billions of dollars in funding to boost U.S. research and development and help for the domestic semiconductor industry. The move comes after Senate Majority Leader Chuck Schumer (D-N.Y.) and House Speaker Nancy Pelosi (D-Calif.) announced in November a deal to craft a way to get the U.S. Innovation and Competition Act through Congress after the Senate passed it in June of last year.
— Shipping firms are making the switch to avoid delays at nearby Ningbo, which suspended some trucking services near that port after an outbreak of Covid-19, according to freight forwarders and experts. Ships are also re-routing to Xiamen in the south, Bloomberg shipping data showed. Upshot: The influx of ships into Shanghai has delayed sailing schedules for container ships by about a week, said freight forwarders. Those delays may then ripple outward to already back-logged gateways in U.S. and Europe.
— China finds Omicron in another port city, further threatening supply chains. Dalian is the third known city with fresh Omicron cases. Chinese officials said today (Jan. 13) that at least one person has omicron in Dalian, a city of seven million. A second person also tested positive for the virus, but the variant is unknown. Both are college students who returned home for the Chinese holiday season from the city of Tianjin, where at least 137 other cases were traced as of Wednesday. Many people are traveling ahead of Lunar New Year. Dalian joins Tianjin as the second crucial port city with confirmed omicron cases. Their ports are among the twenty largest in the world and serve as major production hubs for foreign companies such as Airbus and Volkswagen.
— Pork prices could fuel China consumer inflation later this year. China’s consumer inflation has been subdued over the past year or so, largely because of the outsized effect of falling pork costs, but that may soon change as the stock of pigs declines. Faster consumer inflation would constrain the ability of the People’s Bank of China to add more stimulus if needed later in the year to support the economy. After a brutal selloff over the past year, pork prices will gradually enter a new cycle of increases in 2022, according to a report in the state-backed China Securities Journal. Along with the effect of previous rises in commodity prices being passed on to consumer goods, more expensive pork will likely push up China’s consumer price index in 2022, the report cited analysts as saying.
— China aims to boost soybean production 40% by 2025. China said it would raise domestic soybean output sharply in the next four years in a drive to boost self-sufficiency. The country has set a goal to produce about 23 MMT of soybeans by end of 2025, up 40% from current output levels of 16.4 MMT, the ag ministry said. According to the five-year plan document, China will cultivate land specifically for growing soybeans, expand soybean-corn rotations and focus on raising yields. Beijing will also expand planting acreage and output of other oilseeds, including rapeseed and peanut, to meet increasing demand for cooking oils and feed protein. Beijing aims to produce 215 MMT of rice, 140 MMT of wheat, and 277.5 MMT of corn by 2025, up slightly from current levels.
— Lawmakers say USMCA needs enforcement. Senate Finance Chairman Ron Wyden (D-Ore.) and Sen. Mike Crapo (R-Idaho) say the potential of the USMCA trade deal “will not be realized without full implementation and enforcement of the agreement as written.” In a letter (link) to U.S. Trade Representative Katherine Tai, they say unless Canada and Mexico are held to their commitments, “U.S. workers, businesses, and farmers will be denied the full benefits they were promised.” They urged Tai to address areas where nations aren’t meeting pledges, including on labor and agriculture reforms.
ENERGY & CLIMATE CHANGE
— Report raises prospect of reduction in final conventional ethanol level for 2022 in RFS. Reuters reported Wednesday that based on administration sources, the Biden administration was considering lowering the conventional ethanol mandate level for 2022 to a mark under 15 billion gallons for the Renewable Fuel Standard (RFS). However, the report did not indicate how much below the proposed mark was being considered at this point. The report indicated refiners and others are pushing back on the proposed level, arguing that the diminished U.S. ethanol industry cannot meet such a level for the mandate.
Biofuel lobbyist responds. Asked during a hearing on electric vehicles Wednesday, Renewable Fuels Association (RFA) leader Geoff Cooper said they “would be greatly concerned” at such a decision by EPA. “We’re going to try and get to the bottom of those rumors and will be absolutely insisting that EPA and this administration follow through on their commitment to restore that 15-billion-gallon commitment for 2022 and beyond,” he noted.
The Reuters report’s timing is odd since EPA held a public meeting on the RFS proposals Jan. 4 and is still taking in public comments on the levels it proposed for 2020, 2021 and 2022 until Feb. 4.
Some suggest the report could be a sort of trial balloon from within the administration to gauge the level of support or opposition to that possibility.
Bottom line: The report did not specify how much of a reduction below 15 billion gallons was being considered for the final RFS levels. It is not unusual to see adjustments in the final levels for RFS mandates vs the proposed marks, but typically those changes have been minimal.
— Rural challenges for EVs. Rural America risks being “left behind” in the transition to electric vehicles, lawmakers and industry groups warned yesterday during a House Agriculture Committee hearing. Rep. Abigail Spanberger (D-Va.) introduced a bill yesterday that she said will ensure “rural communities have greater access to EV charging infrastructure” by making the equipment eligible under the Agriculture Department’s Rural Energy for America loan and grant program.
Ethanol lobbyist to EV proponents: We are greener than you are. “The upstream emissions associated with electricity generation and battery manufacturing are often overlooked, giving the false impression that electric vehicles are zero-emission vehicles,” said Geoff Cooper of the Renewable Fuels Association (RFA), a trade group. “These overlooked emissions can be quite significant.” An RFA analysis showed that a pickup truck using fuel that is 85 percent ethanol and 15 percent gasoline would generate far fewer greenhouse gas emissions over its lifetime than the same-size pickup truck “running on fossil-generated electricity,” said Cooper at the House Ag hearing.
LIVESTOCK, FOOD & BEVERAGE INDUSTRY
— Supply chain snags, labor shortages and rising inflation are stressing food production and distribution. Result: high prices and some products hard to find. Biggest reason for the surging food prices is lack of labor, say food industry contacts. That is leading to wage inflation, which will be permanent, and knock-on effects for the supply chain.
Some increases over the past year:
- Beef & Veal: Up 18.6%
- Pork: Up 15.1%
- Fish: Up 8.4%
- Chicken: Up 10.4%
- Bakery products: Up 4.8%
But inflation is much more than just the rise in food prices. Last year’s surge in car prices was a byproduct of component shortages that hit automakers globally. New and old motor vehicles, with a weight of more than 8% in the CPI index, jumped a record 20.9% last month.
— Thousands of workers at supermarket operator Kroger went on strike in Denver, the latest push by employees who said they are seeking higher wages, more benefits and safer workplaces. About 8,400 unionized workers at Kroger’s King Soopers stores walked off the job at 7 a.m. ET on Wednesday, according to Kroger and United Food and Commercial Workers Local 7.
— Update on possible Supreme Court decision on Prop 12 petition. At this Friday’s conference, the Supreme Court will vote to grant the last cases that will be argued this term (barring expedited briefing on some emergency matter). Last week the Prop 12 petition from the National Pork Producers Council and Farm Bureau was “relisted”. When a case is rescheduled, the justices will consider the case at a different conference than the one for which it had originally been scheduled. Unlike relisted cases, which are considered at one conference and then set for reconsideration at the next conference, rescheduled cases are moved to a new conference without first having been considered. Rescheduled cases are similar to relisted cases, however, in that it is almost impossible to know exactly why a particular case has been rescheduled.
Update on Prop 12 petition. California has enacted several laws over the years that regulate the sale of items — ranging from foie gras to fuel — based on the method of production that the state believes is too carbon-intensive. Challengers regularly argue that such laws violate so-called dormant commerce clause principles by discriminating against (or seeking to alter) disfavored out-of-state production methods. A few challenges to such laws have reached the court over the years, but National Pork Producers Council v. Ross, 21-468, is the first one since 2014 (the foie gras case) that experts can recall being relisted. As we have previously detailed, California bans the sale of pork in the state unless the sow from which it was derived was housed with 24 square feet of space and in conditions that allow the sow to turn around freely without touching her enclosure. Challengers argue that almost no farms satisfy those standards, and farmers almost universally keep sows in individual pens that do not satisfy those standards during the period between weaning and confirmation of pregnancy, “for animal health and business reasons.” Challengers argue that the law is impermissibly extraterritorial because virtually all the pork consumed in California is raised outside the state.
— Summary: Global cases of Covid-19 are at 317,259,965 with 5,515,127 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 62,203,866 with 844,562 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 522,482,674 doses administered, 208,182,657 have been fully vaccinated, or 63.42% of the U.S. population.
— Truck drivers must comply with OSHA’s shot-or-test emergency temporary standard unless an employer can show the driver is rarely inside buildings and doesn’t share the truck cab with another worker, the agency said in guidance. The U.S. Occupational Safety and Health Administration (OSHA) issued the compliance information (link) to answer questions about the standard. The contentious regulation applies to most private employers with 100 or more workers. As of Monday, employers were required to have unvaccinated workers wear face masks indoors. Employers will need to ensure by Feb. 9 that every worker is either fully vaccinated or passes a weekly Covid-19 test. Nick Geale, the American Trucking Associations’ vice president of workforce policy, said the group was pleased OSHA acknowledged most solo truck drivers are and should be exempted, but added that the agency didn’t go far enough.
POLITICS & ELECTIONS
— GOP Rep. Hollingsworth won’t seek re-election: Rep. Trey Hollingsworth (R-Ind.) said he won’t seek another term. “I want to be the change I want to see in this world, so, as I contemplate how I can work for you in new and better ways in the future, I won’t run for reelection this year,” he wrote in a piece on the Herald-Times website (link). He first won in 2016.
— If inflation persists, President Biden could pay a political price in November’s midterm elections, which will determine control of both houses of Congress. “This is going to have huge consequences in the fall,” longtime Republican pollster Frank Luntz said. He said that voters in focus groups he has conducted have been increasingly anxious and that while the coronavirus pandemic remains a top concern, the rising cost of goods is becoming more dominant. “Of all the economic issues, this is number one,” Luntz said. “And it’s number one because whether you are upper middle class or lower middle class, you’re still affected.”
— McCarthy will not cooperate with Jan. 6 probe. House Minority Leader Kevin McCarthy (R-Calif.) said he will not cooperate with a request from the House select committee investigating the January 6 riot. McCarthy was asked to voluntarily provide information to the committee, including details about former President Trump’s state of mind during the riot and the weeks that followed. McCarthy refused, charging the committee "is not conducting a legitimate investigation," citing House Speaker Nancy Pelosi's (D-Calif.) rejection of some of his picks to serve on the panel. Republican Rep. Liz Cheney of Utah, the vice chairwoman of the committee, did not rule out the possibility of subpoenaing McCarthy for the information they want, suggesting McCarthy's defiance is an attempt to “cover up” what occurred that day.
— What it would take for the GOP to build its biggest majority since the Great Depression. Sabato’s Crystal Ball takes a look at that topic (link). With some key national factors seemingly in their favor, the article notes that “Republicans could win a healthy majority in the House in 2022 — perhaps even their biggest in nearly a century.” However, compared to past Republican midterm wave cycles, specifically 1994 and 2010, “Republicans probably have less room for growth.” As a majority of states have enacted new maps, the article charts out what a banner night for House Republicans may look like. Upshot: “There are, though, at least a couple of reasons to believe that whatever the Republican House gain is this year — if there is in fact a gain, which seems very likely — will be smaller than in the past couple of GOP mega-waves.”
— Democrats’ complex strategy on voting rights legislation. Late Wednesday the House approved a rule covering the John Lewis Voting Rights Advancement Act and the Freedom to Vote Act. The vote was 220-202, split completely along party lines. These two pieces of legislation were combined via HR 5746, the NASA Enhanced Use Leasing Extension Act of 2021. That measure is expected to be approved today by the House. The House is passing voting rights in a NASA bill because if this bill is sent over to the Senate as a “message,” it has certain privileges because Senate Majority Leader Chuck Schumer (D-N.Y. can bring the bill to the floor for debate without facing a Republican filibuster on the motion to proceed. The Senate can have a full day of debate lasting into Friday. Schumer would then file cloture to cut off debate Friday sometime late Friday. The required intervening day would be Saturday and then a cloture vote would be Sunday. That is when the Senate would attempt to break the expected Republican filibuster at a 60-vote threshold. Most think Democrats will be unable to get cloture. If so, Schumer will have to decide if he wants to try to alter the Senate rules via the “nuclear option” (a straight partisan vote). He would seek a ruling by the parliamentarian on whether the filibuster applies to voting-rights legislation. The parliamentarian would likely say yes, it does. Since Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) are against changing the rules with just Democratic votes and are against eliminating the 60-vote threshold, Schumer’s effort would fail.
OTHER ITEMS OF NOTE
— Biden administration imposed sanctions following a spate of North Korean missile tests, including two this week. The sanctions were placed on six North Koreans, one Russian and a Russian firm alleged to be responsible for supplying goods for the U.N.-prohibited weapons program. U.S. officials said they remain committed to pursuing diplomacy with North Korea, an approach that has proven unsuccessful so far.
— NATO’s secretary-general, Jens Stoltenberg, warned of a “real risk for new armed conflict in Europe” after a fruitless round of talks with Russia over its threat to Ukraine. Russia’s unrealistic demands include a pledge that NATO not be expanded; NATO said it would be willing to discuss arms control and missile deployments. Russia’s deputy foreign minister said it would not allow proposals to be cherry-picked.
Bottom line: In statements following the talks, Russian officials suggested Moscow could resort to military action if political efforts fail. That warning came a day after the Russian military conducted live-fire exercises along the border. The U.S. has finalized sanctions options in the event that Russia invades Ukraine, senior administration officials said yesterday. A third set of talks with Russia is happening today in Vienna.
— Europe’s growing dependence on Russian gas and oil is limiting the Continent’s room to maneuver in the mounting U.S.-Russia crisis over security in the region and making it highly vulnerable in the event of an escalation, the Wall Street Journal reports (link). Russia’s saber-rattling on the Ukraine border and its failure to increase — and its occasional throttling of — gas deliveries to Europe already have helped to send energy prices rocketing there. Europe gets almost one-third of its natural gas from Russia.
— Des Moines Register is ending home delivery on Saturdays, starting in March. Multiple other newspapers owned by Gannett made the same announcement yesterday.
— Remembering… Ronnie Spector, leader of girl group The Ronettes, who died at age 78 after a brief battle with cancer. The group, known for its liberal use of eyeliner and beehive hairdos, was behind 1960s "wall of sound" hits like Be My Baby and was the only girl group to tour with the Beatles. Dare you to listen to Be My Baby and not hum it most of the day… or Eddie Money’s Take Me Home Tonight which featured Ronnie.