Hemp regs from USDA today | Britain heads for Dec. general election | RFS hearing
In today's updates:
* Trump upbeat about Phase 1 of trade talks with China
Markets: Monday's rise in equities was propelled by expectations of a third consecutive rate cut from the Federal Reserve, which has started a program to purchase $60 billion per month in Treasury bills until the end of 2019 and took the extraordinary action to shore up overnight liquidity starting in September. Trade optimism is also back after the USTR said Washington will consider extending certain tariff exclusions on $34 billion worth of imports from China.
Beyond Meat reported its first quarterly profit after-the-bell Monday, topping expectations for earnings and revenue. But shares came under pressure after the company said it would need to offer more discounts to deal with growing competition. As of Monday's close, the stock was up over 320% from its $25 offering price in May. But its shares are sinking as locked-in investors see “the time to cash out.” The stock sank 9% in premarket. The lockup period — or time when investors who bought into the stock pre-IPO are unable to sell it — expires today.
The Houston Astros are just one win away from clinching their second World Series title in three years. The Astros face off with the Washington Nationals back in Houston tonight. If the Nationals win, Game 7 will be tomorrow night. Nats' fans are trying anything to get another victory. For example, the writer of this dispatch is hoping his “Baby Shark” cat brings home a victory.
— U.S./China trade policy update:
- President Trump on Monday said “Phase 1” trade talks with China were ahead of schedule. “We are looking probably to be ahead of schedule to sign a very big portion of the China deal, and we’ll call it phase one but it’s a very big portion,” Trump said. “That would take care of the farmers. It would take care of some of the other things. It will also take care of a lot of the banking needs.” The agreement is expected to be signed when Trump and Chinese leader attend the APEC summit Nov. 16-17 in Chile. “So we're about, I would say, a little bit ahead of schedule, maybe a lot ahead of schedule,” the president said. “Probably we'll sign it.”
- The Office of the U.S. Trade Representative (USTR) is opening a new China tariff exclusion process later this week, allowing companies that won around 1,000 exclusions for products on the $34 billion list to apply for an extension. The exclusions, awarded annually, are set to expire on Dec. 28, but USTR said in a Federal Register notice Monday (link) that they could be extended up to 12 months. USTR said it will accept extension applications from Nov. 1 to 30.
- China will eliminate all restrictions on foreign investments not included in its self-styled "negative lists," a vice commerce minister said today. It will also "neither explicitly nor implicitly" force foreign investors and foreign companies to transfer technologies, Wang Shouwen told a news conference in Beijing.
- FCC chief signals vote on barring Huawei, ZTE coming. The Federal Communications Commission (FCC) is expected to designate China’s Huawei and ZTE as national security risks, according to a statement from FCC Chairman Ajit Pai. The Nov. 19 vote would bar the firms from being able to utilize and $8.5 billion U.S. government fund to purchase equipment or services, and the agency is expected to propose requiring U.S. firms using their technology to remove and replace the equipment. The U.S. regulator is expected to ask carriers how much removing and replacing technology from the two companies from their existing networks and set up a reimbursement program to offset costs of replacing that equipment. "When it comes to 5G and America's security, we can't afford to take a risk and hope for the best," Pai said. "As the United States upgrades its networks to the next generation of wireless technologies — 5G — we cannot ignore the risk that the Chinese government will seek to exploit network vulnerabilities in order to engage in espionage, insert malware and viruses, and otherwise compromise our critical communications networks.” Reactions from China included Huawei indicating they have never had a major security-related event in any of the countries where they operate. Chinese Foreign Ministry spokesman Geng Shuang said China was "resolutely opposed" to pressure on Chinese companies, calling it "economic bullying.” The FCC has been reviewing the matter for some 18 months. The FCC stance is that the linkages to the Chinese government and Chinese military along with Chinese laws that call on companies to help the Chinese government with intelligence actions are a security risk. This comes as ZTE reported its profits in the third quarter had quadrupled in the wake of the firm recovering from being hit by U.S. sanctions last year that were lifted after ZTE paid some $1.4 billion in penalties.
— China to miss deadline for enforcing mandatory use of ethanol-blended gasoline by 2020. Backlash from energy firms and local governments have pushed back China's effort for compulsory use of E10 across the country, as just three northeastern provinces, all home to a corn ethanol industry, and the northern city of Tianjin, have hit the target. “When the ethanol fuel policy came out two years ago, we thought it was a big deal,” Zou Jun, an analyst at Sublime China Information, a consultancy, told the Financial Times. “We now realize it will take a long time before E10 really affects corn demand.” The slow pace of ethanol usage has doused hopes that China’s corn demand will receive a boost from the E10 mandate.
— No administration officials to testify today at House hearing on small refinery waivers. The House Energy & Commerce Environment and Climate Change Subcommittee holds a hearing today on the Trump administration’s use of small refinery waivers (SREs) under the Renewable Fuel Standard (RFS). The panel will feature testimony from the Renewable Fuels Association (RFA), World Energy, Siouxland Energy Cooperative and the American Fuel and Petrochemical Manufacturers (AFPM). That will provide the panel with a likely diverse set of views from the private sector on the SREs, however there are no administration officials listed as testifying at the session even as the hearing is entitled, “Protecting the RFS: The Trump Administration’s Abuse of Secret Waivers.” Link for testimonies.
The hearing will focus on the supplemental RFS proposal published Monday by EPA in the Federal Register (link). “EPA issued the supplemental proposed rule in response to concerns from the biofuels industry about erosion of demand for biofuels (resulting from the large number of recent SREs),” according to a memorandum on the hearing from staff of the House Energy & Commerce Committee. “The proposal has received pushback from both the biofuels and refining industries. The refining industry — especially those refineries that do not receive SREs — would be required to take on additional compliance burdens. The biofuels industry asserts that the addition of 770 million gallons to the RVO falls short of the amount needed to restore the biofuel market and make up for gallons waived through the issuance of SREs.”
— USDA will release hemp regulations today, as growers, processors and others hope the coming rules will help clear confusing and different state rules and legal issues such as how to test for the presence of THC. The regs were cleared last week by the White House. The FDA and EPA also have guidelines pending for matters under their jurisdiction.
— Other items of note:
House to vote on impeachment inquiry. Lawmakers will consider a resolution laying out the Democrats’ path for the inquiry into President Trump and a move to a public phase of the investigation, including nationally televised hearings. Less than two weeks earlier, House Speaker Nancy Pelosi (D-Calif.) brushed off the calls from Republicans to hold a vote that formally authorized the impeachment probe. Meanwhile, voters’ deeply partisan views about the economy may mean that the issue doesn’t matter much in next year’s elections, according to a new survey (link to NYT article).
Is there any connection between America’s recent withdrawal from north-eastern Syria and the discovery, soon after, of Islamic State leader Abu Bakr al-Baghdadi in the north-west, in territory protected by Turkey? Reports note that Information provided by the Kurdish-led Syrian Democratic Forces (SDF) and Iraqi security officials were key to the CIA-led intelligence gathering effort that led to the raid.
Jeff Sessions, President Trump’s first attorney general, may challenge Senator Doug Jones for his old Senate seat in Alabama. He has until 5 p.m. Nov. 8 to decide whether to be a last-minute entry into the 2020 race. Link for details from the Associated Press.
Britain is heading for a December general election after Labour said today that it would back prime minister Boris Johnson’s move to bring the country’s Brexit crisis to a head. Jeremy Corbyn, Labour leader, declared after a meeting of the shadow cabinet that his conditions for an early election had been met and that he was satisfied that a “no deal” Brexit had been taken off the table.
Auto industry divided over emissions standards. Along with Toyota and Fiat Chrysler, General Motors is backing the Trump administration in its clash with California over pollution standards. The decision pits them against leading competitors, including Honda and Ford, who this year reached a deal to follow the state's stricter policies. Obama-era rules from 2012 called for a fleet-wide fuel efficiency average of 46.7 mpg by 2026, compared with 37 mpg by 2026 under the Trump plan.
Amazon announced it will start delivering grocery products within a two-hour window to all Prime members living in the 2,000 regions eligible for the service. That means Prime members, who pay $119 per year in the U.S. for benefits, will now also be able to get free grocery shipments.
— Markets. The Dow on Monday gained 132.66 points, 0.5%, to 27,090.72, leaving the blue-chip index within 1% of its high reached in July. The S&P 500 rose 16.87 points, 0.6%, to 3,039.42, a record close. The Nasdaq Composite added 82.87 points, 1%, to 8,325.99, its second-highest close.