Fed Head Powell Talks Tough on Inflation; Will Continue to Boost Rates Until Inflation Tamed

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G7 countries continue to mull options to export grain out of Ukraine

 

                                                In Today’s Digital Newspaper

 

Finland, Sweden formally apply for NATO membership. The two Nordic countries’ bid to join the organization breaks with a decadeslong defense doctrine that has seen them balance political and security partnerships with other Western nations while staying out of formal military alliances. Russia President Vladimir Putin said he sees no threat from the countries joining the military alliance.

Russia and Ukraine have put peace talks on an indefinite hold, both sides said on Tuesday. An adviser to Ukrainian President Volodymyr Zelensky said negotiations were suspended because Moscow hasn’t considered changes in the situation in Ukraine since its invasion. “They still live in a world where supposedly there is Ukrainian Nazism,” he said. In the U.S., a $40 billion bill to help Ukraine fight and to aid refugees advanced in the Senate, with passage expected later this week, likely Thursday.

Russia can now claim control of an unbroken swath of territory from Russia’s border to Crimea, more than 200 miles away. It also means Ukraine’s Black Sea shoreline has been cut in half since the war began.

The U.S. is expected to begin blocking Russia from paying American bondholders, raising the prospect of a Russian default.

The U.S. is looking at a potential tariff on imports of Russian crude as it seeks to limit global energy price hikes from a European Union-proposed embargo, the WSJ reports.

U.N. Secretary-General António Guterres will announce a plan to speed up the world's switch to renewable energy today, saying that the war in Ukraine is a wake-up call for the globe to ditch fossil fuels.

USDA daily export sale: 229,200 metric tons of soybeans received during the reporting period for delivery to unknown destinations. Of the total, 10,200 metric tons is for delivery during the 2021-2022 marketing year and 219,000 metric tons is for delivery during the 2022-2023 marketing year.

Chair Jerome Powell talked tough on inflation Tuesday, saying that "no one should doubt" the Federal Reserve's resolve to quell U.S. inflation. "What we need to see is inflation coming down in a clear and convincing way, and we are going to keep pushing until we see that," he told the Wall Street Journal.

Wells Fargo CEO Charlie Scharf said the U.S. is headed for an economic downturn but signs suggest it won’t be severe.

Inflation jumped to a 40-year high in the U.K. in April, hitting the highest level recorded by a G7 country since the global surge in prices started last year. Much of the rise was driven by electricity and gas prices following an increase in regulated energy tariffs. Earlier this month, Britain’s central bank said inflation could touch 10% later this year. It is expected to increase interest rates again next month.

Japan’s economy shrinks. The world’s third-largest economy contracted at an annualized rate of 1 percent in the first quarter, set back by coronavirus restrictions, higher energy prices and supply chain issues. Analysts say growth is likely to bounce back in the second quarter.

Airfares could remain high for the foreseeable future, Frontier CEO Barry Biffle said at WSJ’s The Future of Everything Festival.

The U.S. extended a limited license held by Chevron to allow the company to maintain its operations in Venezuela but didn’t expand the license to allow for drilling. The move comes a day after Washington relaxed Trump-era restrictions on Cuba, which included lifting a cap on remittances and improving visa processing services.

Gasoline pump prices have risen above $4 a gallon in all states in the U.S. for the first time ever as the last holdouts — Kansas, Oklahoma and Georgia — saw prices rise overnight, according to auto club AAA. In California, the most expensive state, prices are averaging $6.021 a gallon, a fresh record, while five other states are above $5 a gallon.

China Eastern Crash: Flight data indicates someone in the cockpit intentionally crashed a China Eastern jet earlier this year.

WRDA: The House Transportation and Infrastructure Committee is set to advance bipartisan legislation (HR 7776) authorizing improvements to the nation’s waterways and investments in flood control and coastal resiliency projects.

Some GOP lawmakers told EPA Administrator Michael Regan his agency was working at cross purposes to the Biden administration relative to food supply issues. Regan also talked about the recent E15 ethanol waiver for summer months. 

The House Ag Committee cleared a measure that would authorize loans, loan guarantees and grants to help expand livestock and poultry processing capacity and promote interstate and local sales of processed livestock and poultry products that meet relevant local, state and federal regulations. The legislation would authorize $100 million for each fiscal year from 2023 to 2025. The bill also would authorize $20 million per fiscal year for fiscal 2023 through 2025 for grants for actions such as identifying business opportunities for processing or establishing centers for training, technology and trade for livestock and poultry processing workers.

Nearly 43,000 people died in motor-vehicle accidents in the U.S. last year, 11% more than the year before — the largest percentage rise ever recorded by federal highway-safety regulators — as traffic rebounded from the early days of the pandemic.

Primaries: Democratic voters in Pennsylvania nominated Lt. Gov. John Fetterman to be their party’s nominee for an open U.S. Senate seat on Tuesday, while the Republican Senate race in the state was too close to call. Details in Politics section.

Election Day 2022 is 174 days away. Election Day 2024 is 902 days away.

 

MARKET FOCUS

Equities today: Global stock markets were mixed overnight. U.S. Dow opened 280 points lower. Jerome Powell says the Fed is watching for signs that inflation’s easing. The Fed chair said the central bank was prepared to raise rates more quickly if price pressures persist. If it looks to be abating, then “we can consider moving to a slower pace,” Powell said, speaking on a Wall Street Journal livestream… more below. In Asia, new data showed that Japan’s economy contracted in the first three months of this year, when restrictions related to a resurgence of Covid-19 infections held back consumer spending. Despite that, Japan’s Nikkei 225 closed 0.9% higher. South Korea’s Kospi and Hong Kong’s Hang Seng each added 0.2% Wednesday. China’s Shanghai Composite declined almost 0.3%.

     U.S. equities yesterday: The Dow gained 431.17 points, 1.34%, at 32,654.59. The Nasdaq moved up 321.73 points, 2.76%, at 11,984.52. The S&P 500 added 80.84 points, 2.02%, at 4,088.85.

     Stocks 051722

Agriculture markets yesterday:

  • Corn: July corn futures fell 8 3/4 cents to $8.00 3/4. December corn fell 4 3/4 cents to $7.60 3/4.
  • Soy complex: July soybeans rose 21 1/2 cents to $16.78, the highest closing price since April 29. November soybeans rose 13 1/2 cents to $15.25 1/2. July soymeal fell $1.80 to $411.80. July soyoil rose 50 points to 83.49 cents.
  • Wheat: July SRW wheat surged 30 cents to $12.77 1/2, a lifetime-high close. July HRW wheat rose 15 3/4 cents to $13.67 3/4, the highest close for a nearby HRW contract since February 2008. July spring wheat rose 8 1/2 cents to $13.93 1/2.
  • Cotton: July cotton fell 219 points to 148.46 cents per pound.
  • Cattle: June live cattle fell 17.5 cents to $133.00. August feeder futures fell 65 cents to $166.775.
  • Hogs: June lean hogs rose $1.325 to $105.15, the highest close since May 6. Pork cutout values rose $2.28 early to $103.83, led by gains in bellies.
     

Ag markets today: Wheat futures faced heavy price pressure overnight, which pulled corn lower. Soybeans are mixed following two-sided trade overnight. As of 7:30 a.m. ET, wheat futures were trading 29 to 37 cents lower, corn was 2 to 6 cents lower and soybeans were fractionally lower to 3 cents higher. Front-month U.S. crude oil futures were around $2 higher and the U.S. dollar index was about 250 points higher this morning.

Technical viewpoints from Jim Wyckoff:

     May 18 Corn

     May 18 Soybeans

     May 18 Crude

     May 18 Bonds

     May 18 Gold

On tap today:

     • U.S. housing starts are expected to fall to an annual pace of 1.75 million in April from 1.793 million one month earlier. (8:30 a.m. ET)
     • Federal Reserve Bank of Philadelphia President Patrick Harker speaks on the economic outlook at 4 p.m. ET.

Powell: Lowering inflation 'nonnegotiable'. Federal Reserve Chairman Jerome Powell said the central bank’s resolve in combating the highest inflation in 40 years shouldn’t be questioned, even if it requires pushing up unemployment. Powell said he hoped that the Fed could bring down inflation while preserving a strong labor market, which he said might lead the unemployment rate — near half-century lows of 3.6% in April — to rise slightly. The central bank is raising interest rates as part of its most aggressive effort in decades to curb upward price pressures.

U.K.’s annual rate of inflation jumped to a forty-year-high in April, the highest level recorded by an industrialized nation since the start of the global price surge last year. Consumer prices in April were 9% higher than a year earlier, a jump from 7% in March and the highest inflation rate since March 1982, the Office for National Statistics said. The acceleration in prices comes as the U.K. economy is slowing and facing a possible recession, economists and politicians say. They have warned that some consumers, especially those on low incomes, could struggle to pay for food and heating next winter.

     UK inflation

Inflation watch: Airfares could remain high for the foreseeable future, as the forces pushing prices upward aren’t going away, Barry Biffle, chief executive of Frontier Group Holdings, said Tuesday. “Their input costs are going up. Unless that subsides, I can’t see why fares would go down,” Biffle said. Airlines are facing higher costs for fuel and labor.

     Air prices

Japan’s economy contracted in the first three months of this year, when restrictions related to a resurgence of Covid-19 infections held back consumer spending. While economists expect a rebound in the current April-June quarter, the outlook for this year is cloudy because of factors including Russia’s invasion of Ukraine, the rise in energy prices and the weakness of the yen, which is near a 20-year low against the dollar. The world’s third-largest economy after the U.S. and China contracted 0.2% in the three months to March from the previous quarter, government data showed today. The economy shrank 1% on an annualized basis, showing what would happen if the first quarter’s pace continued for a full year. Japan has struggled to achieve continuous growth since Covid-19 hit. In contrast to the U.S., China, and major European economies, the Japanese economy has yet to recover its prepandemic level.

     Japan GDP

Market perspectives:

     • Outside markets: Nymex crude oil futures prices were firmer and trading around $114.00 a barrel. Meantime, the U.S. dollar index is firmer in early trading. Brent crude, the international benchmark for oil, added 0.9% to $112.96 a barrel. In bond markets, the yield on the benchmark 10-year Treasury note ticked up to 3.001% from 2.969% Tuesday.

     • Gasoline tops $4 a gallon in every U.S. state for the first time. Gasoline pump prices have risen above $4 a gallon in all states in the US for the first time ever, according to auto club AAA. Rising gas costs aren't likely to fall anytime soon as crude oil prices hover around $110 per barrel at the start of the summer travel rush. The record comes as the national average for gas reached $4.523 a gallon, the highest recorded average price. Prices in Georgia rose to $4.064 a gallon, up from $3.996 Monday. In Kansas, the average cost per gallon was $4.006, up from $3.986, and in Oklahoma, it increased to $4.011, up from $3.998. On the other end of the spectrum, the average price per gallon in California was $6.021.

        Gas $
        National gas

   • Day 1 HRW tour results. Scouts on the first day of the Wheat Quality Council HRW tour found an average yield of 39.5 bu. per acre in northern areas of Kansas, down from 59.2 bu. per acre in this area last year and the five-year average of 46.9 bu. per acre. Scouts reported much of the wheat sampled on multiple routes from Manhattan to Colby was shorter than normal, and plant populations were sparse in the driest fields. “We don’t seem to be catching (rains) and it feels like the crop is on a knife-edge, just hanging on,” said Jeanne Falk Jones, a Kansas State University extension agronomist. Scouts will sample fields in western and southern Kansas today along routes from Colby to Wichita.

     • Market comments from grain trader and analyst Richard Crow: “The markets are nearing an adjustment where rain is bearish and not bullish.  Rapid plantings in the center belt leave the East and North as areas of potential late planted acres. The weather forecast is for rain across the central belt for two days.  If one wants to watch a potential problem, the dry climate in the southern plains builds to the North in the 90-day forecast.”

     • Ag trade: Taiwan purchased 55,000 MT of corn – likely to be sourced from South Africa.

     • NWS weather: Severe thunderstorms and flash flooding expected over portions of the lower Ohio Valley today... ...Flash flooding concerns for portions of the Northern Plains and Upper Midwest on Thursday... ...Record breaking heat continues in Southern/Central Plains; East begins to warm up; cold air surges through Northwest... ...Critical Risk of Fires over portions of the Southwest into the Central/Southern Plains on Thursday.

        NWS 051822
        Wx 051822

Items in Pro Farmer's First Thing Today include:

     • Wheat retreats overnight
     • Smaller wheat crops expected in Nebraska, Colorado
     • Firm forecasts Russian wheat crop at 85 MMT
     • Cash cattle trade starts with weaker tone
     • Key day for hog futures

 

RUSSIA/UKRAINE

— Summary: Even as the Kremlin prepares to take full control of the ruins of Mariupol city, it faces the growing prospect of defeat in its bid to conquer all of Ukraine's eastern Donbas because its badly mauled forces lack the manpower for significant advances. Peace negotiations between Russia and Ukraine have stagnated, officials said, with both sides trading blame and Moscow indicating a return to talks may be difficult.

  • G7 mulls Ukraine aid as Yellen, Lindner call for Marshall Plan. Group of Seven (G7) finance ministers meeting in Bonn this week will discuss an aid package to support the immediate financial needs of Ukraine, according to government officials. While final figures have not yet been decided, the G7 is expected to consider a preliminary contribution of 5 billion euros ($5.3 billion) for the first month. Treasury Secretary Janet Yellen referenced the Marshall Plan as a model of what Ukraine might one day need. Named after former Secretary of State George C. Marshall, that was a huge U.S. support package to aid war-torn Europe. “Eventually, Ukraine will need massive support and private investment for reconstruction and recovery, akin to the task of rebuilding in Europe after 1945,” she said in a speech in Brussels. “What’s clear is that the bilateral and multilateral support announced so far will not be sufficient to address Ukraine’s needs, even in the short term.” Speaking at a Marshall Fund event in Berlin on Tuesday evening, German Finance Minister Christian Lindner agreed, saying his country’s development bank — KfW — should be part of any plan.
  • Biden administration is poised to fully block Russia’s ability to pay U.S. bondholders after a deadline expires next week, a move that could bring Moscow closer to the brink of default. The Treasury Department’s Office of Foreign Assets Control is expected to let a temporary exemption lapse once it expires on May 25, according to reports. The waiver, issued shortly after the U.S. levied sanctions on Russia over its invasion of Ukraine in February, has given Moscow room to pay coupons, helping it avert default on its government debt.
     
  • A tariff on imports of Russian oil has been floated by the U.S. as a way to limit global energy-price increases that could be caused by an EU-proposed Russian oil embargo.
     

— Market impacts:

  • There currently are about 450 seafarers and 84 merchant ships, some full of wheat and corn, trapped at Ukraine’s shuttered ports, according to a State Department spokesperson. There’s another 22 million tons of grain sitting in silos near the ports, according to the official. Reports continue to circulate the U.S. may support creating a U.N. or NATO-led humanitarian corridor to help ships carrying grain leave Ukraine’s port and sail through the Black Sea.
  • Canada says it will dispatch ships to Romania to pick up Ukrainian wheat for distribution around the world. Link for details.
  • Next year will be worse for Ukraine farmers than 2022. Harveast. Ukraine’s agricultural production may fall 30%-40% y/y this year due to the war, but 2023 will be “very bad,” said Dmitriy Skorniakov, CEO of Harveast Agri Holding in Ukraine. “Sooner or later, we’ll find some solution with logistics” for exports, but sales could be later than normal, he said at the GrainCom conference in Geneva. For example, wheat that would usually be sold in July might only be cleared by year’s end. Corn sales that usually took place from October-March might get delayed to December-June. That means a huge “money gap” for farmers, and they’ll also need to pay for inputs sooner, as seed and input companies are less willing to sell the products on loan

 

POLICY UPDATE

— Senate proceeds to Ukraine bill. Senators voted 88-11 yesterday to proceed to the $40.1 billion Ukraine aid bill, another procedural step toward passage. Final passage is expected on Thursday.

 

PERSONNEL

— Manchin to back Barr as Fed official. Sen. Joe Manchin (D-W.Va.) says he will support Michael Barr’s nomination to be vice chair of supervision at the U.S. Federal Reserve, adding key support for the Treasury Department veteran as President Joe Biden continues working to fill central bank vacancies. Biden last month nominated Barr, one of the architects of the Dodd-Frank Act of 2010, to the post after Manchin sunk Sarah Bloom Raskin’s nomination and she withdrew from consideration.

— Supreme Court’s soon-to-be newest member, Ketanji Brown Jackson, has hired a full complement of law clerks for her first term on the bench — including two who previously served in her lower court chambers.

— David Tatel has stepped down from his role as an active judge on the U.S. Court of Appeals for the D.C. Circuit, leaving a pair of open seats for Biden to fill on the powerful court.

 

CHINA UPDATE

— China Eastern black box points to intentional nosedive. Flight data indicates someone in the cockpit intentionally crashed a China Eastern jet in March, killing 132 people, according to people familiar with U.S. officials’ preliminary assessment of what led to the accident.

— China's new home prices fall. A monthly measure of new home prices in China fell for the first time in more than six years, offering further evidence of the pain that Beijing’s regulatory campaign is inflicting on a sector that has long served as an economic growth engine. Average new-home prices in 70 major cities edged 0.11% lower in April from a year earlier, according to Wall Street Journal calculations (link) based on data released Wednesday by China’s National Bureau of Statistics. The decline, though slight, marks the first such decrease since November 2015.

— Taiwan must gird itself against possible Chinese aggression with military deterrence, including acquiring the right weapons and proper training, America’s chief naval officer said Tuesday. “That is a big lesson learned and a wakeup call, particularly with respect to not only having the right kit but are people trained to use it the right way,” Admiral Michael Gilday said Tuesday at an event on knowledge gleaned from Russia’s war in Ukraine.

— China’s pork imports down sharply from year-ago in April. China imported 140,000 MT of pork in April, according to official customs data, the same amount as March but down 67.6% from last year. Through the first four months of this year, China’s pork imports plunged 65.1% from the same period last year to 560,000 MT.

— China is in talks with automakers about extending costly subsidies for electric vehicles that were set to expire in 2022, aiming to keep a key market growing as the broader economy slows, three people familiar with the matter said. Link for details via Reuters.

— China just saw a record bond sell-off. Now it's main trading platform isn't publishing foreign debt trades, according to Bloomberg. The China Foreign Exchange Trade System hasn't published any data since May 11.

 

ENERGY & CLIMATE CHANGE

— Iowa governor signs bill expanding E15. Gov. Kim Reynolds (R-Iowa) signed legislation Tuesday that will subsidize and expand sales of E15 gasoline and other renewable fuels. The “Biofuels Access” bill requires retailers “with compatible infrastructure” to offer E15 by Jan. 1, 2026, from at least one dispenser, while newer retailers and those that install new tank designs must offer E15 from at least 50% of dispensers after Jan. 1, 2023. The bill provides for some waivers, including for small retail locations. The bill also funds grants for upgrades to help businesses meet the requirements and establishes new tax credits for B20 and B30 biodiesel.

     Reaction. Iowa Renewable Fuels Association Executive Director Monte Shaw called the bill a “nation-leading policy that will greatly expand consumers’ ability to find lower-cost biofuels at pumps across the state.” Opponents argued the move would do little to affect prices because E15 is sold at fewer than 3,000 retail stations nationwide.

— House sets vote on gas price control bill. House Majority Leader Steny Hoyer (D-Md.) said lawmakers plan to vote Thursday on HR 7688, which would allow the president to issue an emergency proclamation making it illegal to sell consumer fuel at a price that’s “unconscionably excessive” and exploitative. The legislation would be considered under a rule with three Democratic amendments. Rep. Fred Upton (R-Mich.), one of the more centrist members of the GOP, said he’s “not aware of any Republicans who are supporting it.”

 

LIVESTOCK, FOOD & BEVERAGE INDUSTRY

— Dems throwing money at baby formula shortage. House Appropriations Committee Chair Rosa DeLauro (D-Ct.) on Tuesday introduced legislation that would help address the nationwide baby formula shortage. The bill would provide $28 million in emergency funds to help the Food and Drug Administration address the current crisis and prevent future shortfalls. “The stories of mothers and fathers struggling to find formula and the images of empty store shelves are heartbreaking,” DeLauro said. Republicans panned the bill as too little, too late. “As with every crisis the Democrats are trying to respond to this week, this bill is yet another case of creating the appearance of responding without actually doing anything,” Rep. Tom Cole (R-Okla.) said at the House Rules Committee meeting. Rep. Kay Granger (R-Texas), ranking member of the House Appropriations Committee, said the bill wouldn’t address federal agencies that have excess stock of formula, nor would it force the FDA to come up with a plan to address the shortage. Meanwhile, the House will bring a bill up on suspension to grant emergency authorization to the WIC program to address the shortage. Education and Labor Committee Chairman Bobby Scott (D-Va.) has been the lead Democrat on this legislation.

— House Ag panel to consider bill to create special investigator at USDA on competition in the livestock industry. The measure would establish an Office of the Special Investigator for Competition Matters at USDA. Opponents say it duplicates authorities at USDA and would potentially bring costly regulations on the industry that they say would further increase food prices. The legislation would establish an Office of the Special Investigator for Competition Matters at USDA with subpoena powers and the ability to file civil lawsuits or take administrative actions against violations of the Packers and Stockyards Act of 1921 by meatpacking companies and live poultry dealers. Rep. Austin Scott (R-Ga.) said Democrats have wrongly blamed the meatpacking industry for higher meat prices while they have pursued policies that he said raised energy costs that have rippled through the economy. “It’s a horrible piece of legislation,” Scott said, adding that it showed someone without an agricultural background had written it. By voice vote, members agreed to an amendment by Rep. Jim Costa, D-Calif., that would require the head of the special investigator office to be a senior career executive rather than a political appointee. Members also by voice vote agreed to an amendment by Rep. Jimmy Panetta, D-Calif., that would require the special investigator to coordinate with the USDA’s general counsel office and with the Packers and Stockyards Division of the Agricultural Marketing Service. The special investigator also would have to notify the U.S. attorney general of any legal action the office takes in a federal district court.

— House Ag panel approves bill to expand meat processing capacity. Congress would create a loan and guarantee program to expand competition in the meat processing industry under a bill approved by the House Agriculture Committee on Tuesday. The bill would authorize up to $20 million a year through 2024 for the loan guarantees. Proponents said the bill would be a permanent version of a $500 million USDA initiative announced last summer. The House Ag Committee approved HR 4140 (link) on a voice vote. It would authorize USDA loan guarantees for projects in rural areas that would expand and diversify the meat processing sector, improve employment or expand markets. In most cases, USDA would not be allowed to make or guarantee a loan of more than $50 million. The limit would be $100 million for cooperatives.

— ADM in lab-meat venture. ADM has entered into a joint development agreement with Eat Just to lower its costs of production and tailor its cultured meat products for markets once they receive regulatory approval. Link for details via the Financial Times.

— U.S. food prices: the trend is higher.

     FoodCosts

— EPA out of step with White House, House Republicans tell Regan. House Republicans tried to describe EPA’s agenda as out of step with the Biden administration’s broader agenda during a Tuesday budget hearing, leading EPA Administrator Michael Regan to repeatedly dismiss the notion. Rep. Dan Crenshaw (R-Texas) said the White House wants to lower food prices while the EPA is seeking to ban pesticides and wants to increase semiconductor manufacturing while the EPA is cracking down on the PFAS chemicals that go into chips. Regan testified before a subcommittee about the agency’s fiscal 2023 $11.9 billion budget request.

     Regarding E15, Regan said: “I think we have to follow the science and follow the law. I think the president pledged that this unprovoked war on Ukraine would cause some stress and some pressure especially at the pump, and he pledged to use all the tools in his toolbox. He asked us to take a look at what we could do. I took a look at the science I looked at E15. And the reason that the waiver is in place is because we want it to get in front of having any kind of supply issues. We know that there are over 2,000 gas stations and rural communities all across this country that could benefit from that E15 waiver. We looked at the science we knew it would not have adverse impacts on the air quality for at least a couple of months. And so, in order to relieve that pressure at the pump, and empower some of our rural communities to have access to those resources, we put that waiver in place.”

— U.S. to ease sanctions on Venezuela, enabling cargoes to Europe. The Biden administration plans to ease sanctions on Venezuelan oil in a bid to bring more of the country’s crude to Europe. The U.S. will allow European companies still operating in Venezuela to divert more oil to the continent immediately while Chevron will be allowed to negotiate a resumption of operations in the country, according to Bloomberg, citing a person familiar with the matter who spoke on condition of anonymity to detail the plans.

 

CORONAVIRUS UPDATE

— FDA authorizes booster for children age 5-11. The Food and Drug Administration (FDA) on Tuesday authorized a booster dose of the Pfizer-BioNTech Covid-19 vaccine to children between the ages of 5 and 11, extending booster doses to the youngest age group yet.

— Biden administration is continuing the pandemic’s public-health emergency beyond July 15, meaning the declaration and its slew of health-related provisions such as expanded coverage to millions of lower-income people could extend into the fall. The administration told states it would give them 60 days’ notice if it were halting the public-health emergency, which was set to expire on July 15. The lack of an alert to states means the declaration will be renewed for up to 90 days.

 

POLITICS & ELECTIONS

Pennsylvania GOP Senate primary still undecided. Former hedge fund CEO and Army veteran David McCormick and Trump-backed TV personality and heart surgeon Mehmet Oz were very close early Wednesday morning, with an estimated 98% of the vote tallied. It appears headed to a statewide recount. Kathy Barnette, a conservative media personality who campaigned extensively with Mastriano, was well behind and out of the running. The winner will face Lt. Gov. John Fetterman, who claimed the Democratic nomination. Fetterman recently suffered a stroke and was unable to attend his primary night rally in person.

     Other contests: In Pennsylvania, state Sen. Doug Mastriano, a Trump-endorsed candidate, won the Republican nomination for governor. He will face state Attorney General Josh Shapiro in November. In North Carolina, Rep. Ted Budd (R-N.C.), who was backed by Trump, will be the GOP Senate nominee. He will face former state Supreme Court chief justice Cheri Beasley, who made history as the first Black woman nominated for the Senate in the state. In North Carolina’s 11th District, scandal-plagued and Trump-backed Rep. Madison Cawthorn conceded to state Sen. Chuck Edwards. Edwards is fast-food franchise owner who with a victory would advance to the November election against Democrat Jasmine Beach-Ferrara, who won Tuesday’s six-candidate Democratic primary. The other endangered Republican, Rep. Mike Simpson (Idaho), easily dispatched with a challenge from his right, winning by more than 20 percentage points. Rep. Kurt Schrader’s (D-Ore.) race against a progressive challenger remained too close to call as of 7 a.m., with few votes counted so far in populous Clackamas County, outside Portland, where ballot printing errors caused a delay in tallying.

     Cook Political Report with Amy Walter summed up Tuesday primaries, noting: “There was something for everyone in the primary contests held in five states on Tuesday night. Trump-backed candidates had a mixed record of success, as did those from the GOP's more centrist or 'establishment' wings. On the Democratic side, progressive candidates came up short in at least three House contests but were successful in two others.  In other words, there's no obvious political narrative to glean from last night's results. But, primary results in a number of races have significant consequences for the fall campaign.”

 

CONGRESS

Fiscal 2023 budget hearings continue today in the Senate Appropriations Interior-Environment Subcommittee where Environmental Protection Agency Administrator Michael Regan is scheduled to testify. In the House Appropriations Financial Services and General Government Subcommittee, Securities and Exchange Commission Chair Gary Gensler and Federal Trade Commission Chair Lina Khan are both slated to answer lawmakers’ questions on their budget requests.

— House panel to consider WRDA bill. The House Transportation and Infrastructure Committee is expected to advance bipartisan legislation (HR 7776) today authorizing improvements to the nation’s waterways and investments in flood control and coastal resiliency projects. The panel will consider dozens of amendments to the bill, which is popular with both sides of the aisle. T&I’s legislation would direct 72 new feasibility studies by the Army Corps of Engineers, eight studies to modify existing projects, and it would authorize construction of 16 pending proposed projects. The committee’s ranking member Sam Graves (R-Mo.) will say it’s critical the Corps “prioritize investment in our rivers’ navigation and flood control infrastructure,” while highlighting floods that occurred three years ago in his district, according to his prepared remarks. The Senate Environment and Public Works Committee approved its version of WRDA (S 4137) unanimously earlier this month.

— The House Ag panel approved by voice its fiscal 2023 budget views and estimates letter to the House Budget Committee. The letter cites the panel’s upcoming work on the 2023 farm bill and the need for additional funding in several programs under its jurisdiction to address agricultural and food supply chain weaknesses, animal disease risks, climate change, natural disasters and other challenges. The committee requested that the Budget Committee propose no reductions in funding for programs under its control.

— Other bills the House Ag panel approved en bloc on Tuesday (Source: Congressional Quarterly):

  • One (HR 2518) by Rep. Ashley Hinson (R-Iowa) that would increase cost-sharing payments and federal payments through existing USDA conservation programs to encourage farmers and ranchers to buy precision agriculture equipment, systems and technology. The Environmental Quality Incentives and the Conservation Stewardship programs would make higher payments to producers to help meet the expense of precision technology and higher payments to producers who use precision agriculture practices. Loan guarantees through the Conservation Loan and Business and Industry programs would be available for private lenders to encourage them to finance farmers and ranchers' precision agriculture purchases.
  • One (HR 2606) by Rep. Glenn "GT" Thompson (R-Pa.) that would allow the USDA to accept private contributions for private-public partnership accounts to be established at the Natural Resources Conservation Service. The funds could be used for projects involving climate change, carbon sequestration, wildlife habitat improvement, protecting drinking water sources and other natural resource priorities as designated by the department. Donors would be able to direct contributions to programs eligible for private funds and to designate where in the U.S. they would like donations to be used. Significant donors would also be able to have the name or brand of an individual or entity attached to be identified as the source of the money for any project that is funded.
  • One (HR 7675) by Rep. Angie Craig (D-Minn.) would direct the department to establish the Agricultural and Food System Supply Chain Resilience and Crisis Response Task Force within 60 days of the legislation becoming law. The Agriculture secretary would name the task force leader, who would be a special adviser to the department. The special adviser would have 270 days after the bill is enacted to report on the state of the food and agricultural system. The bill as amended would sunset the task force as of Sept. 30, 2023.
  • One (HR 7764) by Rep. Josh Harder (D-Calif.) would authorize $750 million to be used in fiscal years 2022 and 2023 for additional payments to participants enrolled in the Environmental Quality Incentives Program who are using conservation practices to limit fertilizer and other nutrient runoff from their land. The payments would be in addition to any cost-sharing funds a farmer or rancher already receives through the program. However, a participant in the program cannot receive total payments that exceed the cost for managing nutrient runoff.

— Executives from Abbott Nutrition and other major baby formula companies have agreed to testify May 25 before the House Energy and Commerce Committee on the root causes of the nationwide formula shortage. Abbott, which has been at the center of the firestorm over the shortages due to a contamination-triggered shutdown of its main plant in Michigan after the deaths of two babies, will be represented by President Chris Calamari. House Speaker Nancy Pelosi (D-Calif.), and House Energy and Commerce Chair Frank Pallone (D-N.J.) floated the possibility of indictments, without any providing details.

 

OTHER ITEMS OF NOTE

Nearly 43,000 people were killed on U.S. roads last year, the highest number in 16 years and a 10.5% jump from 2020. Preliminary figures released Tuesday by the agency show that 42,915 people died in traffic crashes last year, up from 38,824 in 2020. Final figures will be released in the fall. Americans drove about 325 billion miles last year, 11.2% higher than in 2020, which contributed to the increase.

— Department of Homeland Security Secretary Alejandro Mayorkas acknowledged yesterday that the agency has "not seen a significant decrease" in migrants coming to the U.S./Mexico border despite its efforts to restrict the flow. In an exclusive interview with CNN's Priscilla Alvarez, Mayorkas said, "We're seeing about a seven-day average of over 7,500 people, so we have not seen a significant decrease in the flows." In April, U.S. Border Patrol stopped border crossers 201,800 times, a 4% drop from March, according to newly released data. But numbers remain at historic highs, straining resources. Mayorkas' remarks come amid uncertainty over the future of the pandemic restriction known as Title 42. The public health authority, which allows officials to turn migrants away at the U.S./Mexico border, is set to end on May 23 — but an ongoing lawsuit may prevent those plans.

— Twitter Inc.’s board said it plans to enforce its $44 billion agreement to be bought by Elon Musk, saying the transaction is in the best interest of all shareholders. The proposed takeover includes a $1 billion breakup fee for each party, which Musk will have to pay if he ends the deal or fails to deliver the acquisition funding as promised.

— A town in southern Japan is suing a man after he allegedly gambled away more than $350,000 in coronavirus relief funds delivered to him in error. The man was slated to receive a 100,000 yen ($770) cash payment as part of a program for 463 low-income households in the town of Abu. Instead, all the money came to his account. The man, who has since gone into hiding, said through his lawyer that the money had been lost on online gambling.

— Should a female elephant have some of the same legal rights as humans? That is the question New York state's top court will consider today, the latest development in a years-long push by an animal rights group to free Happy the Elephant from the Bronx Zoo.


 

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