USDA’s Weekly Export Sales Report to Resume Reporting on Sept. 15

China wants some sort of rebuke of Pelosi before talking on climate

USDA daily export sale: 396,000 metric tons of soybeans received in the reporting period for delivery to unknown destinations during the 2022-2023 marketing year.

USDA Foreign Agricultural Service Administrator Daniel Whitley issued the following statement Wednesday regarding weekly export sales reporting:

     "As a result of unanticipated difficulties with the launch of the new Export Sales Reporting and Maintenance System, USDA’s Foreign Agricultural Service will temporarily revert to the legacy system while we work to fully resolve the issues with the new system. FAS will be unable to publish weekly export sales data on Thursday, Sept. 1 or Thursday, Sept. 8, but we expect to resume regular reporting on Thursday, Sept. 15. Since the system relies on data submissions by exporters, FAS is working closely with individual exporters to ensure that past, current, and future export sales data are accurate. Our staff will continue to conduct outreach and provide support to both data reporters and data users in anticipation of the re-launch of the new system.”

The U.S. dollar's strength has sent other global currencies spiraling, pushing many toward their weakest levels in decades. We have details in the Market section.

How hot is it or will it be in California? More than 55 million people in California alone were placed under heat alerts, with the state’s Central Valley expected to reach 115 degrees Fahrenheit in coming days and Death Valley hitting a whopping 124 degrees Fahrenheit. Meanwhile, Californians told not to charge electric cars days after announcement of a new gas car sales ban ahead. Details in Energy & Climate Change section.

Reports now suggest that OPEC+ is not looking at crude production cuts, while a renewed Iranian nuclear deal could push more barrels on the market. G7 finance ministers will also meet virtually tomorrow and are expected to endorse a plan to set a cap on the price of Russian oil and commit to finalizing its implementation.

Oil prices posted their third straight monthly decline. Recession worries are upstaging supply concerns to pull prices lower. Benchmark U.S. oil futures have shed nearly 8% over the past two days. Brent crude, the international benchmark, fell 12% in August to $96.49 a barrel.

The U.S. has drained about 130 million barrels of crude oil from the Strategic Petroleum Reserve (SPR) since late February. That market support is set to end next month. But there has been some market chatter that the Biden administration, before Nov. 8 elections, will announce another tapping of the SPR.

A recession is coming for Europe and the chatter continues about an economic downturn in the United States. We have perspectives on both below.

Recent shipping data shows improving logistics. We have details in the Market section.

For you corporate planners, new research by McKinsey & Co has everything you need to know about how the latest tech trends will impact your business.

U.N. inspectors delayed their inspection of Ukraine’s Zaporizhzhia nuclear power plant amid nearby fighting between Russian and Ukrainian forces. Ukraine’s state nuclear power company said the plant’s fifth reactor was also shut down due to the nearby shelling. The facility is occupied by the Russians, and Ukrainian officials have accused them of attempting to spoil the inspectors’ visit.

China has committed "serious human rights violations" against Uyghur Muslims in its northwestern region of Xinjiang, which may amount to "crimes against humanity" according to a long-awaited report released Wednesday by the United Nations. Human rights groups are calling this a groundbreaking moment in the effort to hold the Chinese government to account. China, however, has fiercely denied committing human rights violations.

The Chinese city of Chengdu will lock down its 21 million residents starting tonight, a seismic move in the vast Western region that has been largely untouched by the virus until recently. Meanwhile, China’s coastal provinces are bracing for the strongest storm of 2022.

China wants some sort of rebuke of Pelosi before talking on climate. The Chinese move comes in retribution for House Speaker Nancy Pelosi’s (D-Calif.) visit to Taiwan in August before it reengages in climate talks.

Senior Taiwanese official: China will try to establish military control of the Taiwan Strait before the 2024 elections in Taiwan and the United States. Details in China section.

On the ag policy front, a potential timeline for a new farm bill was given by the potential new House Ag Chairman G.T. Thompson (R-Pa.) should Republicans take over the House next year. Details in Policy section.

Many analysts and traders say the fate of the wheat market depends on Ukraine production potential. In the Russia/Ukraine section, we note that fighting is not impacting Ukraine’s Black Sea grain export corridor and that Ukraine’s 2023 wheat crop is expected to sharply decline.

Tariffs placed on Chinese imports by former President Donald Trump during his term have pulled in more than $150 billion over the past 50 months, according to data from Customs and Border Protection.

Walmart is taking a stake in a planned Nebraska beef processing plant to help stock its meat sections, one step in a plan to develop a network of facilities to supply its stores. Details below.

McDonald’s speaks out against California fast-food bill. Details in Food Industry section.

FDA signs off on Omicron boosters. Booster shots targeting Omicron BA.4 and BA.5, the dominant Covid strains in the U.S. at the moment, from both Moderna and Pfizer–BioNTech are likely to be available for free within days — once the CDC gives its blessing.

Rep. Charlie Crist (D-Fla.) resigned from Congress after winning the Democratic primary in Florida’s governor race, dealing a swift blow to Democrats who aim to maintain a majority in the House of Representatives this fall.

We have several Nov. 8 election updates in the Politics & Elections section.

Equities today: Global stock markets were lower overnight. U.S. Dow opened around 100 points lower. Traders are awaiting Friday morning’s employment situation report from the Labor Department. That report is expected to show the key non-farm payrolls growth number at up 325,000 in August versus the July report showing a gain of 528,000 non-farm jobs. Asian equities posted losses after China announced a new lockdown in the city of Chengdu (see China section for details). In Asia, Japan -1.5%. Hong Kong -1.8%. China -0.5%. India -1.3%. In Europe, at midday, London -1.5%. Paris -1.5%. Frankfurt -1.4%.

     U.S. equities yesterday: The Dow fell 280.44 points, 0.9%, to 31,510.43. That pushed the blue-chip index to a 4.1% decline in August. The S&P 500 dropped 31.16 points, 0.8%, to 3,955, extending its monthly loss to 4.2%. The Nasdaq slipped 66.93 points, 0.6%, to 11,816.20, furthering its monthly rout to 4.6%.

Agriculture markets yesterday:

• Corn: December corn fell 6 3/4 cents to $6.70 1/2, around the mid-point of today’s range.
• Soy complex: November soybeans fell 9 3/4 cents to $14.27 3/4, the contract’s lowest closing price since Aug. 19. October soymeal fell $9.10 to $420.70, while October soyoil rose 121 points to 68.90 cents.  
• Wheat: December SRW wheat rose 11 1/4 cents to $8.31 1/2 and December HRW wheat gained 14 3/4 cents to $9.12 1/2, both near session highs. Spring wheat futures rose 9 cents to $9.29 1/2.
• Cotton: December cotton rose 89 points at 113.21 cents.  
• Cattle: October live cattle tumbled $1.25 to $142.575, the contract’s lowest closing price since Aug. 2, while September feeder futures rose 27.5 cents to $182.45.
• Hogs: October lean hogs fell $2.075 to $91.525. The CME lean hog index extended its slide, dropping $1.90 to $109.36, the lowest since June 17, and is expected to fall another $1.74 today.
   

Ag markets today: Corn and soybeans faced followthrough selling overnight while wheat retreated from Wednesday’s gains amid pressure from outside markets and building global recessionary concerns. As of 7:30 a.m. ET, corn futures were trading 8 to 10 cents lower, soybeans were 16 to 19 cents lower and wheat futures were mostly 5 to 11 cents lower. Front-month crude oil futures were around $1.75 lower and the U.S. dollar index was nearly 400 points higher this morning.

Technical viewpoints from Jim Wyckoff:

On tap today:

      • U.S. jobless claims are expected to rise to 245,000 in the week ended Aug. 27 from 243,000 one week earlier. (8:30 a.m. ET) UPDATE: Initial jobless claims, a proxy for layoffs, decreased to a seasonally adjusted 232,000 last week from a revised 237,000 the previous week, the Labor Department said Thursday. Claims appear to be on a downward trend after ticking up earlier this summer. Last week’s total was above the 2019 weekly average of 218,000. The four-week moving average for initial claims, which smooths out weekly volatility, fell by 4,000 to 241,500. Continuing claims, a proxy for the number of people receiving government unemployment payments, increased to 1.44 million in the week ended Aug. 20 from 1.41 million a week earlier.
     • U.S. labor productivity for the second quarter is expected to contract at a 4.3% annual pace, up from a previously reported 4.6% decline. (8:30 a.m. ET)
     • S&P Global's U.S. manufacturing index for August is expected to hold at 51.3, unchanged from a preliminary reading. (9:45 a.m. ET)
     • Institute for Supply Management's manufacturing index is expected to fall to 51.8 in August from 52.8 one month earlier. (10 a.m. ET)
     • U.S. construction spending for July is expected to fall 0.4% from the prior month. (10 a.m. ET)
     • Highlights from USDA September 2022 farm income forecast, 11 a.m. ET.
     • Federal Reserve Bank of Atlanta President Raphael Bostic speaks at Georgia Tech at 3:30 p.m. ET.
     • President Biden returns to Pennsylvania, a crucial battleground in the midterm elections, to deliver remarks in Philadelphia at 8 p.m. ET on the "battle for the soul of the nation."

Fed’s Williams: Neutral more like 3.5% than 2.5%. Former Treasury Secretary Larry Summers last month said it was "analytically indefensible" for Fed Chairman Jerome Powell to conclude that interest rates were at a neutral setting — one that neither spurs nor slows growth — after Powell observed that rates had returned close to the neutral level that officials estimate is likely to prevail over the longer run. Fed officials think the real or inflation-adjusted neutral rate is around 0.5%, and a 2.5% nominal neutral rate assumes inflation is at 2%.

     So where do Fed officials think a short-run neutral interest rate sits given that inflation is much higher than 2%? New York Fed President John Williams offered one such projection in an interview Tuesday. Williams said he expects inflation will drop to 2.5%-3% next year, which means that if the real neutral rate is still around 0.5%, that would imply a short-run neutral rate of around 3.5%. Williams says interest rates need to rise above that level to maintain a restrictive policy setting.

     Bottom line from Williams: "So if you think about next year, if inflation is somewhere between 2½% and 3%...you’re thinking about having interest rates that are well above that, because it’s the interest rates minus the inflation rate tells you what the real interest rate is."

The Fed’s benchmark rate is in the 2.25% to 2.5% range, but Cleveland Fed President Loretta Mester said Wednesday she sees rates rising significantly higher to over 4%. Nor does she expect the central bank to cut rates next year. The Fed is expected to hike rates by another three quarters of a point later this month.

Europe is heading for recession. How bad will it be? Its inflation shock is coinciding with an economic downturn, notes the Economist. It concludes: “Quite how bad the downturn will be depends on how the energy shock plays out, and how policymakers respond to it.” Link for details.

What about a U.S. recession? Many economists anticipate economic growth will slow in 2023, but there’s yet to be consensus on whether we’ll enter an official recession. Forbes breaks down the likelihood of a recession happening next year, and how the downturn could impact stocks and investors. Link to article.

New research by McKinsey & Co has everything you need to know about how the latest tech trends will impact your business. The McKinsey Technology Trends Outlook is a guide to the 14 emerging technologies attracting the most investment, innovation, interest, and adoption across every sector. Link for details.

Market perspectives:

     • Outside markets: The U.S. dollar index is solidly higher in early U.S. trading. Meantime, the yield on the 10-year U.S. Treasury note is fetching 3.2%. The 2-year U.S. Treasury note yield hit a 15-year high today, at 3.51%. The inverted yield curve is another clue suggesting a U.S. economic recession is imminent. Crude is lower, with U.S. crude around $88.50 per barrel and Brent around $94.50 per barrel. Gold and silver futures were lower, with gold around $1,712 per troy ounce and silver around $17.57 per troy ounce.

     • The yen touched a 24-year low overnight. The dollar's strength has sent other global currencies spiraling, pushing many toward their weakest levels in decades.

• The WSJ Dollar Index rose 2.6%. The index, which measures the U.S. currency against 16 others, ended the month just below 20-year highs.
• Against the dollar, the British pound had its worst month since October 2016, falling 4.6%. The pound is nearing its lowest level since 1985.
• The euro set a new 20-year low, falling 1.7% against the dollar over the month, and continuing to teeter around parity.
• The Japanese yen fell toward a level last reached during the Asian financial crisis in 1998, of 140 yen per dollar. For the month, the dollar rose 4.3% against the yen.

     • Crypto.com accidentally sent an Australian customer $7.2 million instead of the intended $68 refund. It’s trying to get it back, but the customer already bought a house with some of the money.

     • Oil prices shed nearly 8% over the past two days and posted their third straight monthly decline, signs that recession worries are upstaging concerns over dwindling supplies of crude at home and abroad. Benchmark U.S. oil futures ended Wednesday at $89.55 a barrel, down from Monday’s closing price of $97.01. Oil was more than $120 a barrel in March, right after Russia invaded Ukraine.

     • The U.S. has drained about 130 million barrels of crude oil from the Strategic Petroleum Reserve (SPR) since late February. That market support, which is set to end next month, has helped push down West Texas Intermediate to about $88 a barrel, down from more than $120 in March. But there has been some market chatter that the Biden administration, before Nov. 8 elections, will announce another tapping of the SPR.

     • Gas prices have dropped for the 11th week in a row, and the national average price was $3.829 per gallon Wednesday, according to AAA. While plunging from a June peak of $5.01 per gallon, regular unleaded is still 69 cents higher than a year ago ahead of the busy Labor Day travel weekend.

        “Gas prices are now $1.20 per gallon lower than mid-June with Americans spending $450 million less on gasoline every day as a result,” said Patrick De Haan, head of petroleum analysis at GasBuddy.

     • Allendale releases results of its farmer crop survey. A farmer survey conducted by agricultural commodity brokerage and analysis firm Allendale Inc. forecasts the U.S. 2022 corn yield at 172.39 bu. per acre, the company said on Wednesday. Allendale projected 2022 U.S. corn production at 14.108 billion bushels. The firm forecasts the soybean yield at 50.86 bu. per acre and production at 4.435 billion bushels. The yield survey, conducted from Aug. 15-28, was based on producer-calculated yields in 26 states. The firm’s production figures were based on USDA’s estimates of harvested acres.    

     • The S&P GSCI, an index tracking commodities futures prices from precious metals to livestock, has declined for 3 months — its longest monthly losing streak since March 2020.

     • The Baltic Dry Index on Wednesday, at 965, is down more than two-thirds from the level of May 23 and the lowest point for the measure of dry-bulk shipping rates since June 2020.

     • Currently, 44% of Asian imports enter the country via the East and Gulf Coasts, compared with about one-quarter in 2008. That has come at the expense of the West Coast, which has seen its share fall to 56% from about 75% during the same period.  While much of the pandemic-era shift is temporary, an increasing number of retail executives say they plan to stick with the East Coast for the long haul.

     • The Drewry Hong Kong-Los Angeles container-rate benchmark dropped 18.1% sequentially in the week ended Aug. 31 to $4,052 per 40-foot container, down 49% from a year earlier. On the surface it might seem that the bottom has fallen out of trans-Pacific rates and that carriers could be heading toward challenging times. But rates are simply continuing to normalize from last year's unsustainable levels and remain well above historical figures: up 19% from 2020, 177% from 2019 and 76% from 2018, according to Bloomberg Intelligence analyst Lee Klaskow. That should drive robust earnings for container-liner operators into 2023.

     • Ag trade: Japan purchased 95,497 MT of milling wheat from its weekly tender, including 67,967 U.S. and 27,530 Canadian. South Korea purchased 63,000 MT of feed wheat that is expected to be sourced from Australia.

     • NWS weather: Prolonged and potentially dangerous heat wave likely into this weekend across much of the West... ...Slight to moderate risk for flash flooding across parts of Texas Thursday-Saturday.

     • More than 55 million people in California alone were placed under heat alerts, with the state’s Central Valley expected to reach 115 degrees Fahrenheit in coming days and Death Valley hitting a whopping 124 degrees Fahrenheit. Link to Forbes’ real-time tracker that documents the most noteworthy historic highs in major cities this year. California ISO, which operates California's electricity grid, is warning that energy demand could set a record for the year during this extreme heat event.

Items in Pro Farmer's First Thing Today include:

     • Price pressure overnight
     • Soy, grain crush reports out this afternoon
     • Fighting not impacting Ukraine’s Black Sea grain export corridor (details below)
     • Kazakhstan scraps restrictions on wheat, flour exports
     • China to publish detailed economic policy measures soon (details in China section)
     • Slow developing cash cattle market
     • Cash hog fundamentals continue to weaken

— Summary: Shelling near the Zaporizhzhia nuclear power plant in Ukraine has prompted the shutdown of one of its two working reactors. The plant, disconnected from the country's power grid last Thursday, has six reactors, only two of which have been functioning. If the safety systems at the facility were to fail, the reactor would heat up swiftly and trigger a meltdown. Fighting around the complex has threatened the possibility of a nuclear accident for months, prompting global concerns. Meanwhile, the Wall Street Journal reports that Ukrainian soldiers say they are advancing in the country’s south amid extremely fierce fighting. Ukrainian army units pushing toward Kherson in the south are retaking ground held for months by Russian troops, according to Ukrainian soldiers who took part in fighting and were being treated for injuries behind the front lines. But even if the offensive is successful, Ukrainian officials and military analysts have said, Ukrainian losses could be high — as their forces are assaulting an entrenched enemy whose firepower can quickly chew up troops.

• Grain storage hit by Russian shelling at Ukraine’s second largest port. Grain silos in Ukraine’s second biggest port at Mykolaiv were hit by Russian shelling of the city Tuesday, causing a fire that was still burning today, Ukraine’s emergencies service said. “As a result of the shelling of Mykolaiv, grain silos at an infrastructure facility in the Korabelny district caught fire,” the emergencies service said.

• Fighting not impacting Ukraine’s Black Sea grain export corridor. The Black Sea corridor to export Ukrainian grain is working as normal despite Russia’s attacks and Kyiv’s counter-offensive in southern areas of the country, Ukraine’s southern military command said on Thursday. “The work of the grain corridors is working according to the previously agreed plan,” southern command spokesperson Natalia Humeniuk said.
• Ukraine’s 2023 wheat crop expected to sharply decline. Ukraine’s 2023 wheat seedings area may fall by 30% to 40% due to lack of funds and production is unlikely to exceed 15 MMT, a deputy chair of the Ukrainian Agrarian Council said on Thursday. Besides lower planted acreage, fertilizer use could be decreased, which would likely limit yields. The country will harvest around 19 MMT of wheat this year after a record crop of 32.2 MMT in 2021.

• Ukraine’s August grain exports fall nearly 60% from last year. Ukraine’s August grain exports fell by 59.5% year on year to 2.26 MMT, agriculture ministry data showed on Wednesday. Export volumes included 763,000 MT of wheat, 1.33 MMT of corn and 161,000 MT of barley.
• The U.S. and its allies are planning to outline a plan to limit the price of Russian oil. Western nations will set out a plan Friday to reduce Russian energy revenues without increasing global oil prices.
  
  How would the caps work? They would likely be implemented close to the cost of Russian production, thereby denting Moscow's finances, but still ensuring critical energy flows. To accomplish this, Europe would restrict the availability of transport and insurance services to shippers that agree to observe the price ceiling (~95% of the world's oil tanker fleet is covered by the International Group of P&I Clubs in London and companies based in continental Europe). Another proposal would apply similar caps on Russian gas prices or limit the usage of U.S. financial services that could also benefit the scheme.
• European foreign ministers agreed to make it more difficult for Russians to get visas to travel to the EU but stopped short of banning Russian tourists.

— If GOP wins House, farm bill timeline given by likely new Ag chair. Rep. G.T. Thompson (R-Pa.), currently ranking member of the House Ag Committee, would begin new farm bill hearings as soon as January should he become the new panel chairman. Thompson wants a farm bill funding allocation from the Budget Committee by next summer. Some but not all programs in the 2018 Farm Bill will begin expiring Sept. 30, 2023. “Give me an opportunity to lead the Agriculture Committee and I will ensure that the farm bill doesn’t become a climate bill and we’re not going to have climate titles,” Thompson stressed.

     Farm bill field hearings at land-grant institutions will be held, including members of both political parties, he added.

     After we talked with Thompson earlier this year, we saw his passion to get going on a new farm bill, despite previous calls by some for an extension of the 2018 Farm Bill. But Thompson today said that is “not an option” because the panel would “miss the opportunity to make improvements, to make tweaks. That’s the whole purpose of doing reauthorization every five years.”

— National Infrastructure Advisory Council appointments. President Biden on Wednesday released a list (link) of industry and government leaders he plans to appoint to the President’s National Infrastructure Advisory Council, which advises the White House on how to reduce physical and cyber risks and enhance the security and resilience of the nation’s critical infrastructure.

— A private gauge of China’s factory activity fell into contraction territory in August as Covid flare-ups and a power crunch hampered the country’s economic recovery. The Caixin China purchasing managers index declined to 49.5 in August from 50.4 in July.

— China to publish detailed economic policy measures soon. Beijing will publish detailed steps for newly announced economic policy measures in early September, suggesting an urgency for policymakers to revive the country’s sluggish economy. The government will lay out detailed plans to implement the 19 new policies it announced last week to support growth as recent factory activity surveys pointed to a further loss in momentum in the world's second-largest economy in August. China will guide commercial banks to provide medium- and long-term loans to key projects and equipment upgrading, state media quoted the cabinet as saying on Wednesday, after a meeting chaired by Premier Li Keqiang. To prop up the weak property market, China will also support rigid housing demand, state media reported.

— U.N. report finds "serious human rights violations" in Xinjiang. The U.N. Human Rights Office of the High Commissioner released a report detailing “crimes against humanity" in Xinjiang against Uyghurs and other ethnic minorities and called for “urgent attention” from the U.N., the world community and China itself to address them. China denounced the long-delayed report. In a sternly worded protest that the U.N. posted with its report, China’s diplomatic mission in Geneva said it firmly opposed the release of the U.N. assessment, which it said ignores human rights achievements made in Xinjiang and the damage caused by terrorism and extremism to the population.

— China locks down 21 million in Chengdu in Covid-19 outbreak. Residents in the southwestern city of 21 million people have been ordered to stay home, and about 70% of the flights have been suspended to and from the city, which is a major transit hub in Sichuan province and a governmental and economic center. No word was issued on when the lockdown would be lifted. Similar measures have seen millions of people confined to their homes in the northeastern city of Dalian, as well as Shijiazhuang, the capital of Hebei province that borders the capital Beijing.

     Perspective: Cathay Pacific, one of the world’s biggest air freight carriers, warned that inflation, supply-chain snags and Covid restrictions in China could lead to weaker cargo demand in this year’s peak season.

— China wants some sort of rebuke of Pelosi before talking on climate. The Chinese move comes in retribution for House Speaker Nancy Pelosi’s (D-Calif.) visit to Taiwan in August before it reengages in climate talks. "The U.S. side should dispel the negative influence of Pelosi scuttling to Taiwan, this is an indispensable condition of China-U.S. climate change cooperation," China's foreign ministry said in a statement to Reuters. China was reacting to Climate Envoy John Kerry’s remarks in an that he hoped talks would resume before the November COP27 climate summit in Sharm el-Sheikh. in January, Chinese leader Xi Jinping said bluntly that he wouldn’t allow the goal of reducing carbon emissions to disturb the economy and that the country must “overcome the notion of rapid success” on climate change.

— Senior Taiwanese official: China will try to establish military control of the Taiwan Strait before the 2024 elections in Taiwan and the United States. “After the 20th Party Congress, we believe that the CCP will attempt to alter the status quo in the Taiwan Strait,” Taiwan’s Mainland Affairs Council deputy minister, Chui Chui-Cheng, said Wednesday through an official interpreter. “For example, they would try to unify with Taiwan. The tactics that they would use include gray zone tactics, and they would try to create conflicts and therefore establish the new normal.” Chui’s team suspects that Chinese General Secretary Xi Jinping will launch the relevant operations in the months after the party congress in October, which is expected to rubber-stamp a third term for the Chinese Communist Party (CCP) chief.

     Chui offered those remarks to a group of international journalists invited to Taipei for briefings focused largely on Taiwan’s desire to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a free trade agreement linking 11 economies across the Pacific Rim and the Americas.

— China's imports of Malaysian oil have soared to nearly 800,000 barrels per day, according to Bloomberg (link). That's more than what Malaysia actually produces on its own. The waters off Malaysia are known for ship-to-ship transfers that mix crude to hide its origin.

— Tariffs placed on Chinese imports by former President Donald Trump during his term have pulled in more than $150 billion over the past 50 months, according to data from Customs and Border Protection (link for details). Trump imposed the tariffs in 2018 and 2019 on $350 billion worth of imports, in retaliation for China’s abusive trade practices, which included throttling American companies’ access to Chinese markets, forced technology transfer, theft of U.S. intellectual property, and currency manipulation. Some of the burden is also borne by the sellers, who are forced to reduce prices.

     China responded by imposing tariffs on U.S. goods, which seemed to depress U.S./China exports in 2019. Exports bounced back in 2020 and increased an additional 20% last year.

     Plans to lift the tariffs were pushed aside by the Biden administration after the Chinese Communist Party (CCP) escalated its aggressive stance toward Taiwan when House Speaker Nancy Pelosi visited the island nation in early August, unnamed sources told Reuters. But White House spokeswoman Saloni Sharma said that “nothing has been shelved or put on hold. The president had not made a decision before events in the Taiwan Strait and has still not made a decision, period,” she said. Commerce Secretary Gina Raimondo told Bloomberg TV that “after Speaker Pelosi’s visit to Taiwan, it’s particularly complicated” to make a decision. “The president is weighing his options,” she said. “He is very cautious. He wants to make sure that we don’t do anything which would hurt American labor and American workers.”

     Besides tariffs aimed specifically at China, Trump also imposed tariffs on imports of solar panels, washing machines, steel, and aluminum. Those have brought in more than $17 billion so far.

— Californians told not to charge electric cars days after new gas car sales ban ahead. Talk about a quick change of pace. Californians may need to take measures to conserve energy, including by avoiding charging electric vehicles, to prevent strain to the state's power grid over the Labor Day weekend, officials said. That comes a week after state regulators voted on a plan to ban the sale of new gasoline-powered cars by 2035. A heat wave forecast for the coming days led California's grid operator to warn that the excessive heat would stress the energy grid and conservation may be needed over the holiday weekend to avert power outages. The California Independent System Operator (ISO) said it issued an order restricting maintenance operations from Aug. 31 through Sept. 6 to ensure that all generators and transmission lines are in service. In a news release, the California ISO said it expects that it will issue calls for voluntary conservation of electricity through Flex alerts over the long weekend.

     Meanwhile, low-income Californians would get a $1,000 tax credit per household if they don’t own a car under a bill lawmakers sent to Gov. Gavin Newsom on Wednesday. The credit is meant to offer incentives to reduce greenhouse gas emissions from cars, according to bill author Sen. Anthony Portantino (D).

— EPA sets alternative RIN retirement schedule for small refineries. EPA earlier this week issued a final rule creating an optional alternative renewable identification number (RIN) retirement schedule for small refineries under the Renewable Fuel Standard (RFS) for compliance year 2020. The agency action finalizes a proposed rule issued in June. The schedule provides small refineries with additional time and a broader range of RINs to comply with their 2020 RFS obligations. The EPA proposed the alternative compliance schedule because the agency determined that there are extenuating circumstances specific to the 2020 compliance year, including a limited availability of RINs and the significant delay in EPA issuing its decisions on small refinery exemption (SRE) petitions.

     Small refineries that elect to use the alternative RIN retirement schedule will have to fully comply with their 2020 RFS obligations, including any RIN deficits from 2019 carried forward into the 2020 compliance year, by Feb. 1, 2024. The alternative RIN retirement schedule includes five quarterly retirement deadlines, spanning from Dec. 1, 2022, through Feb. 1, 2024. Since the deadlines extend into the 2024 calendar year, small refineries are potentially able to use 2021, 2022, 2023, and 2024 RINs to satisfy a portion of their 2020 RVOs. Link to rule.

— Delta, DG Fuels partner on SAF. Delta and DG Fuels LLC announced a new agreement under which DG Fuels plans to plans to establish a new SAF supply stream that could provide Delta with 385 million gallons of unblended SAF over seven years.

— Walmart steering its own supply chain. The retail giant is taking a stake in a planned Nebraska beef processing plant to help stock its meat sections, one step in a plan to develop a network of facilities to supply its stores. The Wall Street Journal reports (link) the partnership between Walmart and Sustainable Beef comes as some food retailers move to take greater control of the commodity-processing portion of their supply chains. Costco Wholesale built its own poultry-processing plant recently to help provide the chain’s signature rotisserie chickens. Walmart has already moved in that direction by opening a milk-processing plant in Indiana in 2018 and a beef facility in Georgia in 2020. The company is among the most active retailers in managing its own logistics and transportation, including one of the largest private trucking fleets in the U.S.

— McDonald’s speaks out against California fast-food bill. Yesterday, the president of McDonald’s USA, Joe Erlinger, came out in full force against a new California bill that he says “should raise alarm bells across the country” (Link). The measure, AB 257, could transform the way the service sector is regulated. The bill, which the California Senate passed on Monday and which awaits Dem Gov. Gavin Newsom’s signature, would create a state council to establish minimum pay and safety conditions. Supporters say it will protect fast-food workers from pay theft, discrimination and unsafe work environments.

     Erlinger says the bill goes too far. His open letter is a sign of just how high the stakes are for McDonald’s and the restaurant industry, which fears similar legislation being adopted elsewhere. “This is a clear example of picking ‘winners and’ losers,” said Erlinger, who called the legislation “the outcome of backroom politicking.” The bill excludes independent operators with fewer than 100 locations. But it applies to chains that are part of a larger company, like McDonald’s. The bill also provides an exemption for restaurants that produce bread “as a stand-alone menu item,” meaning it probably won’t extend to chains like Panera.

     Erlinger isn’t against reform. He said that he wanted to see progress on worker pay and protections, and that new measures should be applied equally across the industry. “Shouldn’t all restaurant workers benefit?,” he asked.

     Erlinger also worries about the inflationary effect of the bill. McDonald’s, for its part, raised the minimum wage at restaurants it owns last year by 10% to reach an average of $15 an hour by 2024. But its franchisees are free to set pay, and they have not all moved in tandem. Some franchisees “still focus too much on the cost side, and don’t see investment in people as a way actually to grow their cash flow over time,” the McDonald’s CEO Chris Kempczinski told the New York Times last year.

— Summary:

• Global Covid-19 cases at 603,119,776 with 6,495,093 deaths.
• U.S. case count is at 94,532,156 with 1,046,244 deaths.
• Johns Hopkins University Coronavirus Resource Center says there have been 604,665,888 doses administered, 223,914,723 have been fully vaccinated, or 67.96% of the U.S. population.

— FDA authorizes vaccines targeting Omicron. The agency’s move marks the first approved redesign of coronavirus vaccines since they were rolled out in late 2020, setting the stage for millions of Americans to receive new booster doses as soon as next week. Two different vaccines aimed at the dominant BA.5 variant were cleared: one made by Pfizer for people as young as 12, and the other by Moderna, for those 18 and older. Only people who have received at least two shots and had at least two months since their last dose will be eligible for the updated booster. The new boosters combine the companies' original vaccine with one that specifically targets the BA.4 and BA.5 Omicron subvariants.

— National test results of 9-year-old American schoolchildren showed that the pandemic erased two decades’ worth of progress in math and reading scores. Link to details via the New York Times.

— Palin loses in special Alaska House race but is back on ballot In November. Former Alaska Gov. Sarah Palin (R) lost to Democrat Mary Peltola in a special election to fill the state’s vacant House seat, Alaska officials announced Wednesday, more than two weeks after polls closed — thwarting Palin’s plans for a political comeback, at least for now. Peltola won 51.47% of the vote for Alaska’s lone House seat, over Palin’s 48.53%, sending Peltola to serve out the remainder of longtime Republican Rep. Don Young’s term following his death in March. Palin and Peltola, as well as Republican Nick Begich III, will all be on the ballot in the general election in November to determine who is elected to the two-year House term—the three candidates advanced in the primary election earlier this month to earn a spot on the ballot in the general election. Peltola, a former state legislator, is the first Alaska Native elected to Congress—her mother is a member of the Yup’ik people. She’s also the first Democrat to represent Alaska in the House in 50 years, since Begich’s grandfather—a Democrat also named Nick Begich—briefly held the position in 1972. The older Begich went missing in a plane crash one year into his term and was replaced by Young, who held the state’s lone House seat for almost a half-century.

     In the wake of Peltola's defeat of Palin, Cook Political Report with Amy Walter will be moving the November rating from Likely R to Toss Up. House editor Dave Wasserman (@Redistrict): “The amount of land mass represented by House Democrats just went up by 104%.”

— Cook Political Report House rating changes: Five races move in Democrats' direction, Including Alaska. Writes House editor Dave Wasserman: “Republican strategists express optimism that the Inflation Reduction Act and President Biden's student loan forgiveness plan will help them shift the spotlight away from abortion and Donald Trump and back onto Democrats' spending measures and inflation. But as we wrote in our new House overview, a post-Dobbs spike in Democratic voter enthusiasm could rein in GOP gains, allowing Democrats in bluer seats to breathe a bit easier. This week, we're moving four suburban Democratic-held seats into safer categories. Notably, we've shifted Rep. Abigail Spanberger (VA-07) and New York's open 3rd CD from Toss Up to Lean Democrat. We're also moving our November rating for Alaska's At Large CD from Likely Republican to Toss Up on the heels of Democrat Mary Peltola's ranked-choice upset of Republican Sarah Palin in the Aug. 16 special election.”

— Democrats have new reason to fear losing control of the House of Representatives in November after Florida Rep. Charlie Crist resigned from Congress.  A new projection estimates there’s now a 23% chance of that happening thanks to Crist’s departure; there’s a 97% likelihood his seat in Florida’s 13th Congressional District will flip to red.

— WSJ poll: Democratic midterm outlook improves but Republicans have fuel to tap into. A new Wall Street Journal poll (link) found that Democrats are entering the homestretch before November’s election in better shape than they were earlier this year, boosted by independent voters, improved views of President Biden and higher voting enthusiasum among abortion rights supporters following the Supreme Court’s June reversal of the 1973 Roe v. Wade abortion ruling. Democrats hold a slight edge over Republicans, 47% to 44%, when voters are asked which party they would support in their congressional district if the election were held today.

     Voters believe Republicans are better able to get inflation under control — by a 12-point margin. Nearly two-thirds of registered voters say the economy is "not so good" or "poor" a larger share than in the March survey, and close to two-thirds say that the pain of higher costs makes them more likely to vote.

     Meanwhile, favorable views of former President Donald Trump declined slightly, and Biden leads Trump, 50% to 44%, in a hypothetical rematch of the last presidential election. They had been tied in March.

     Background: The WSJ poll of 1,313 registered voters, with a margin of error of plus or minus 2.7 percentage points, was conducted Aug. 17-25.

— Peter Thiel rebuffs Republican calls for more money. The Silicon Valley billionaire rejected entreaties by Senator Mitch McConnell (R-Ky.), the minority leader, for more money to help the Arizona Senate campaign of his protégé Blake Masters, the Washington Post reports (link). Thiel’s move is a potential setback for Republicans.

— Federal prosecutors likely won’t wage any potential charges against former President Donald Trump ahead of November to avoid political ramifications leading up to the midterm elections. It’s standard — but often ignored — Department of Justice policy to prohibit prosecutors from bringing charges that could sway voter sentiment within 60 days of an election.

— U.S. airlines commit to free meals, lodging for delays as Labor Day chaos looms. The move by the carriers comes after Transportation Secretary Pete Buttigieg demanded airline CEOs provide free meals and hotel rooms for lengthy delays. The updates come on the eve of the Labor Day weekend travel rush and as airlines have canceled more than 45,000 flights since the start of June, according to data from FlightAware.

— A new rule from the Federal Highway Administration aims to make U.S. road markings brighter to help drivers — and autonomous vehicles — stay in their lanes.

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